The sharp deceleration in the rate of growth could raise the fiscal deficit for 2002-03 by 30 basis points, official sources admitted. The fiscal deficit is likely to slip from 5.3 per cent to 5.6 per cent in the revised estimates for 2002-03.

The Budget for 2002-03 had targeted a 5.3 per cent fiscal deficit based on an estimated real GDP growth of 6 per cent. With the Central Statistical Organisation revising the growth figure to 4.4 per cent, the finance ministry will have to recalculate the budget numbers.

The ministry will also have to factor in the impact of a lower than expected revenue growth, both in tax collection and lower divestment proceeds.

However, it will have some room for maneouvre because the GDP deflator used to calculate the deficit is based on current prices, which takes into account inflation. The rate of inflation has been low this fiscal.

Tarun Das, director-general of the Confederation of Indian Industry said if the CSO figures were correct, despite the revival in manufacturing in the last quarter, it was a cause for concern.

He said the low growth figures could be attributed to the very sharp negative growth in agriculture and added that it underlined the need for greater reforms and progress in agriculture.