Confirming a slowdown, Indian Finance Minister Pranab Mukherjee said on Friday that economic growth will moderate to about 7.5 per cent in the current fiscal, lower than the earlier projection of 9 per cent.

"I am confident that we will be covering some of the losses in our growth momentum and may end the year with over 7.5 per cent," he said while addressing the Hindustan Times Leadership Summit here.

GDP growth in 2010-11 stood at 8.5 per cent.

The economy expanded at the slowest pace in two years at 6.9 per cent in the July-September quarter of the current fiscal. For the first half (April-September) of the fiscal, the average growth rate stood at 7.3 per cent.

GDP growth in the second quarter of the fiscal slowed to 6.9 per cent from 8.4 per cent in the corresponding period last year, mainly on account of rising interest rates and the uncertain global scenario.

The tight monetary policy employed by the RBI to tame inflation affected the performance of manufacturing and other infrastructure sectors, with the eight core industries recording only 0.1 per cent growth in October, the lowest in the last five years.

In the Budget for 2011-12 fiscal, Mukherjee had projected a GDP growth rate of 9 per cent plus/minus 0.25 per cent.

"My growth projection was on the basis of achievements which we have immediately after the international financial crisis of 2008," he said, adding, "I am modest. I have not said that I will be reaching the figure I projected in the Budget."

"We can not expect we can reach a high growth rate of 9 per cent overnight. We will have to live with relatively moderate growth this year. Next year, we will try to improve the growth rate higher. This year, growth could be 1 per cent down. We should focus on the strategy of domestic demand-driven growth," he said.

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No case for stimulus to boost moderating growth, says Montek

Indian Planning Commission Friday said there is no case for providing stimulus to the industry to arrest moderating growth as the fiscal deficit is high and may exceed the Budget estimate of 4.6 per cent by about one percentage point.

"I don't think it (slowdown) has happened because of lack of stimulus... What is the case for stimulus. In a sense, there is going to be a stimulus because the deficit will be exceeded," Planning Commission Deputy Chairman Montek Singh Ahluwalia said while speaking at the Hindustan Times Leadership Summit.

He conceded said that the fiscal deficit is likely to be above the Budget Estimate of 4.6 per cent of GDP.

"If you just count the different elements where there is deterioration it may look like one per cent (more than fiscal deficit budget estimate of 4.6 per cent)... Net effect we don't know yet. But I did say it will be more than 4.6 per cent," Ahluwalia said.

He, however, said that there is no question of going for a stimulus package to boost growth.

"Already the fiscal deficit will be worse than budgeted estimate (of 4.6 per cent of GDP)... How much more I can't say. But there will be savings on expenditure. They (the government) may be able to reduce expenditure," he added.

The government's fiscal deficit has risen to Rs 3.07 lakh crore, or 74.4 per cent of the Budget estimates, in the first seven months (April-October) of 2011-12, as non-tax revenue growth has declined.

The economy expanded at the slowest pace in 2 years at 6.9 per cent in the July-September quarter of the current fiscal. For the first half (April-September) of the fiscal, the average growth rate is 7.3 per cent.