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The State Bank of India has cut its India’s economic growth forecast for the current fiscal to 5.4 per cent from 5.7 per cent projected earlier.
However, the country’s largest lender has decided to keep the forecast for 2015-16 unchanged at 6.5 per cent, with an upward bias.
“At this point of time, we feel achieving the 5.7 per cent GDP growth projected earlier seems difficult. So we are trimming it. We are not changing the 2015-16 forecast as of now,” Saumya Kanti Ghosh, Chief Economic Advisor, SBI Group, told BusinessLine .
Fiscal compulsions On the Mid-year economic analysis report, Ghosh said he sees the Government resorting to some deep expenditure cuts this fiscal to meet the fiscal deficit target of 4.1 per cent of the GDP.
Now that the Government has said that the fiscal deficit target of 4.1 per cent was “sacrosanct”, there is a possibility of it going in for some “deep expenditure cuts” to achieve the goal, he said.
This could be the case given that revenue collections have been lower than anticipated and much below the budgeted growth rates.
In the mid-year economic analysis report, the Finance Ministry has said that a pick up in economic activity in the second half was “critical” to help achieve the fiscal deficit target of 4.1 per cent.
Despite the challenges, the Government is committed to meeting the 4.1 per cent fiscal deficit target set in Budget 2014-15, said Arvind Subramanian, Chief Economic Advisor in the Finance Ministry, here on Friday.
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