Government to reassess GDP forecast for this fiscal: FM Arun Jaitley

With RBI lowering the growth forecast to 7.4% for the current fiscal, Finance Minister Arun Jaitley on Tuesday said the government will reassess its GDP projections.

"It is not necessary for us to make our own parallel judgement at this stage. We will reassess the situation," he said after the Reserve Bank announced its fourth bi-monthly monetary policy review.

Chief Economic Adviser Arvind Subramanian said the reassessment would be done after second quarter results.

The RBI has lowered its economic growth forecast for the current fiscal to 7.4% from 7.6%.

"With global growth and trade slower than initial expectations, a continuing lack of appetite for new investment in the private sector, the constraint imposed by stressed assets on bank lending and waning business confidence, output growth projected for 2015-16 is marked down slightly to 7.4% from 7.6% earlier," the RBI said in the policy review.

The Finance Ministry had earlier pegged the growth rate for FY 2015-16 at around 8.1-8.5% which now looks difficult to achieve as the growth in the first quarter worked out to be only 7%.

Jaitley further said the government is "fully committed in meeting the fiscal deficit targets in order to consolidate the gains achieved by the contained inflation".

The government has pegged the fiscal deficit target at 3.9% of the GDP for the current fiscal.

The decision of the central bank to cut repo rate or short-term lending rate to 6.75% from 7.25% will significantly provide policy support to the real economy and help in the economic recovery process, he said.