The government on Friday lowered the economic growth forecast for the current fiscal from its previously projected rates. The rate was dropped to 7-7.5% from 8-8.5%, PTI reported. The growth rate projected in the government's mid-year economic review is more in line with the Reserve Bank of India's growth projection of 7.4%. The lower rate is due mainly to a decline in agricultural output as farmers struggled with poor rainfall and weather calamities.

The government's report added that while retail inflation will likely be on target around 6%, the decline in economic growth rate will make it harder to meet the fiscal deficit target – 3.9% of the GDP. Tax collections have also been less stable, and indirect taxes have done better than direct taxes.

The finance ministry also said that the exports, which have been declining for the last 12 months, are likely to show improvement next year. In a positive, macroeconomic stability has improved considerably, which means that the economy is better protected from external shocks, PTI reported.