Hopes of the finance ministry to revert to a pre-crisis growth rate of nine per cent for this financial year have all but been dashed.
The ministry is likely to lower its growth projections in the range of 8.5-8.75 per cent from nine per cent projected in the Economic Survey.
Chief Economic Advisor Kaushik Basu and his team are working on the numbers and the revised estimates are likely to be announced by the end of this month.
The finance ministry is awaiting some more data in the next few days to help it arrive at a precise number.
"This year the gross domgrowth is likely to be in the range of 8.5-8.75 per cent. We will get some more data by the end of month which will help us arrive at a more accurate figure," said a finance ministry official.
India's economy grew by 8.5 per cent in the previous financial year (2010-11).
If the growth for this financial year is lowered to 8.75 per cent, which the ministry considers possible at the moment, it would not be a steep revision, as the Economic Survey had projected the growth to drop or increase by 0.25 percentage points, depending upon the state of the economy.
As such, the lower end of the Survey's projection is 8.75 per cent.
On Wednesday, Finance Minister Pranab Mukherjee had also said with "hard work" it would surely be possible to grow at 8.75 per cent this year, with a variation of 0.25 per cent on either side.
Data on some key economic indicators will be released in the next few days.
While index of industrial production (IIP) numbers for April will be out tomorrow, wholesale price index (WPI)-based inflation for May will be released on June 14.
Indirect tax collection figures for April-May and trade data for May, showing the trends in exports and imports,
The data released so far this year have made the government wary of meeting its key Budget targets this year, fiscal deficit and tax collections.
HSBC Purchasing Managers Index data, released last week, showed manufacturing and services, two key sectors in the Indian economy, were showing signs of moderation.
Six core sector industries, crucial for economic growth, expanded by 5.2 per cent in April, the slowest in five months.
Exports grew 34.4 per cent in April despite uncertainty in Europe and the US, but economists say this trend would not sustain in the rest of the year.
The economic growth fell below the psychological mark of 8 per cent to 7.8 per cent in the fourth quarter of 2010-11.
Even though the economy had registered 9.3, 8.9 and 8.3 per cent growth in the first three quarters respectively, lower growth on account of a slowdown in manufacturing pulled down the full year's growth to 8.5 per cent -- a notch lower than the projected 8.6 per cent.
In fact, the World Bank, in its report released yesterday, had lowered India's growth projection for 2011-12 at 8.2 per cent, while RBI projections are more conservative at 8 per cent.
The government pegged its fiscal deficit at 4.6 per cent of GDP this year after successfully reducing it to 4.7 per cent last year, against 5.1 per cent as projected. This year, however, it might be a difficult task for the government to keep the deficit under control on fears of an increase in subsidy burden.
Though gross direct tax collections showed over 37 per cent rise in April-May, net direct tax collections were down 48 per cent due to huge refunds issued by the revenue department in these two months.
The revenue department has already expressed intention to lower the indirect tax collection target.
