Minister of State for Finance Jayant Sinha on Saturday said 2016-17 would be a challenging term with headwinds from low farm sector growth, the global slowdown, and implementation of the Seventh Pay Commission report and the One Rank One Pension.
“Next year is a challenging year. Headwinds of two major factors will be slowing us down — low agriculture growth due to two consecutive years of monsoons and low exports due to the global economic slowdown,” he said at the Annual General Meeting of industry body FICCI, adding that the Centre would also have additional liabilities from higher salaries and pensions.
“So going into next year and hitting the fiscal deficit target will be challenging… we are hoping that structural reforms undertaken will help us go to eight per cent growth in 2016-17,” he said, adding that the government will achieve the fiscal deficit target of 3.9 per cent of GDP in 2015-16.
Sinha’s comments come a day after the Mid Year Review of the Economy that revised downwards the growth forecast for the current fiscal to between 7 per cent and 7.5 per cent while underlining challenges to growth in the next fiscal.
However, the Minister stressed that India is in a much more stable macro-economic situation. “We have to look at some high frequency indicators such as sales of commercial and passenger vehicles, sale of petrol and diesel, consumption spending, and electricity usage….the economy is in a very different stage than two years ago…when all the macro-economic indicators were flashing red,” he said.