The Finance Ministry maintained its optimism about closing the year with strong growth performance and macroeconomic stability and expressed confidence in achieving the budgeted deficit target for the year.

India aims to cut its fiscal deficit to 5.9% of GDP in FY24, on its path to lowering it to 4.5% by FY26.

The downside risks to growth include inflation, which continues to keep the government and RBI on “high alert”, it said in its October Monthly Economic Review.

The ministry said a fuller transmission of the central bank’s monetary policy tightening may temper domestic demand. CPI inflation in October eased to a four-month low of 4.9%, although food inflation remained largely unchanged at 6.6%.

“With more than half of the current financial year witnessing positive developments in the economy, the full financial year should conclude as projected with a strong growth performance and macroeconomic stability,” the report said.