The finance ministry on Thursday said the 9 per cent growth projection for this fiscal may have to be revised on account of the high global commodity prices and the ongoing debt crisis in Europe.
"It is true the way the global scenario has moved and in Europe there has been deterioration. We are worried about Greece and oil price which, despite softening over the last week, has been very high.
"In this scenario it is likely we are going to downgrade growth projection a little bit," chief economic advisor Kaushik Basu said.
Basu also said the country's headline inflation is likely to be around 8.5 per cent in April (the data of which will be released next week) below the 9 per cent average projected by the Reserve Bank of India for the first half of 2011-12.
His comments came a day after Finance Minister Pranab Mukherjee said it would not be possible to achieve the targeted growth rate of 9 per cent in 2011-12 because of rising global commodity prices.
"Due to volatility in international commodity prices and other supply constraints, it may not be possible to achieve the growth rate of 9 per cent (+/-0.25 per cent) for the current financial year," Mukherjee had said
"Overall inflation that we will get for the month of April now looks like it will be somewhere between 8.5 and 8.6 per cent which is a decent drop," Basu said.
This is below the 9 per cent average inflation projected for the first half of this fiscal by the Reserve Bank in its monetary policy released earlier this month. Headline inflation was 8.98 per cent in March, much above the government's comfort zone of around 5 per cent.
Though rising food prices were the main contributor to inflationary pressure in 2010, recent months have witnessed a rise in prices of core (non-food) items. Core inflation was above 7 per cent in March.
The RBI had hiked interest rate by 50 basis points earlier this month to tame demand and control inflation. It was the ninth hike in short-term lending and borrowing rates made by the central bank since March, 2010.
Basu, however, added that other fiscal targets remained on track.
"I don't think anything has happened to change our view... we want to hold on to 4.6 per cent (fiscal deficit) and borrowing at Rs 340,000 crore (Rs 3,400 million). We want to hold on to those targets. Nothing has happened as yet to require a change in these positions," he said.
