Warning of difficult months ahead, finance minister Pranab Mukherjee today said pressure on the rupee will continue and growth in the current fiscal is likely to be less than the earlier estimate of 7.5%.
"Rupee depreciation is largely driven by global factors and the pressure would continue until there is a durable solution to the sovereign debt problem in Europe," he said while speaking at the NDTV Business Leadership Awards in Mumbai.
The fourth quarter of the current fiscal is likely to be difficult and growth could fall below 7.5%, he said, adding that maintaining the fiscal deficit at 4.6% of the GDP during 2011-12 would be a major challenge.
"We have a difficult three months ahead of us in this fiscal year. Our growth for 2011-12 may be around 7.5% or less," he said.
The government, he added, will have to be alert to "shape real-time policy responses, reform systems, improve the regulatory framework of our institutions to make the most of the opportunities coming our way." The RBI, he said, would take into account the important concern of balancing the targets of controlling inflation and keeping up growth and employment generation.
The central bank is slated to come out with its monetary policy review on January 24. With respect to the fiscal deficit, Mukherjee said, "Performance during the first half on the fiscal front poses some risks in both receipts as well as expenditure estimates. Adhering to the fiscal deficit target of 4.6 per cent of the GDP in 2011-12 is a major challenge."