New Delhi: India is expected to grow by 7-7.5% in 2015-16, slower than the previous estimate of 8.1-8.5% as weak exports, sluggish farm sector and private investment weighed on faster expansion, the government’s mid-year review showed on Friday.

In the Economic Survey of 2014-15, the finance ministry had forecast a growth of 8.1-8.5% for the current fiscal which ends in March. While RBI estimated growth to be about 7.4% this year, private economists and multilateral agencies said the Indian economy will expand close to 7.5%. The Indian economy, Asia’s third largest, is seen as a bright spot against the backdrop of slowing growth across the world. Even with this growth rate, India will still be the fastest growing economy in the world.

The government vowed to meet the fiscal deficit target of 3.9% for the current financial year without resorting to any expenditure cuts but said the fiscal outlook for next year was challenging and called for a careful reassessment of both fiscal and monetary policies. Retail inflation is likely to be within RBI’s target of about 6% in 2015-16.

“The economy is recovering but it’s hard to be very definitive about the strength and breadth of the recovery for two reasons — economy is sending mixed signal and second there is some uncertainty over how to interpret GDP data,” said Arvind Subramanian, chief economic adviser in the finance ministry.