Finance Minister Pranab Mukherjee said on Wednesday that economic growth would be slower than government projections, highlighting how high inflation, rising rates and global financial turbulence threaten India's economic momentum.
"Most of us are expecting India's growth to go down below 8%. This is disappointing," Mukherjee told a news conference.
"But if we can, we must not lose perspective of the global situation. There is slowdown all over the world."
"Let me not hide the fact that I have been disappointed by our growth components over the last few months. It is evident that India's growth rate in 2011-12 will be less than what we presented in February when I presented the budget."
Economic growth was slated in the budget for around nine% this fiscal year.
Businesses have winced at a series of rate hikes by the Reserve Bank of India -- there have been a dozen since March 2010 -- and are bracing themselves for the prospect of another round at the bank's next policy review on Oct 25.
But the Wholesale Price Index (WPI), India's most closely watched inflation gauge, stayed well above the RBI's comfort zone at more than 9% in September, underscoring India's difficulty in bringing down stubbornly high inflation.
Industrial output growth for Asia's third-largest economy has dwindled into low single digits, while car sales are expected to rise just 2-4% this fiscal year March 2012, according to an industry body.
Exports are also forecast to slow down.
Slowing growth and steadily high global oil prices have also put pressure on the fiscal deficit.
Private economists see fiscal deficit widening up to 5.6% of gross domestic product in the current fiscal year 2011/12 ended-March, against government's target of 4.6% as the gap between tax receipts and spending widens.