target. It would be a difficult target to reach. The focus is on meeting target. It would add confidence ...," Rajan said.
Besides fiscal deficit and slowing growth, the document said the pressure points also include elevated inflation.
However, growth will be driven by factors like improved business confidence, better industrial output numbers, corporate profitability and moderating inflation.
The document said that achieving Budget targets in case of corporate tax, customs and central excise would be "somewhat difficult given the trend so far".
Rajan said low corporate profitability is impacting revenue realisation. "We hope it will start picking up once again and that should add buoyancy (to tax revenue)" he said.
The government, he said, will have to find ways to boost growth to improve corporate profitability and tax collection.
Rajan said that corporate performance will also improve with RBI reducing interest rates, which could be seen as one of the factors affecting growth.
Expressing concern over high current account deficit (CAD), the document said the government should endeavour to reduce it by improving the exports and trade balance.
It said that the CAD and trade deficit would be lower than the last fiscal. In 2011-12 fiscal, CAD was 4.2 per cent.
"We are worried about CAD. We want to take steps to monitor it," Rajan said, adding that gold imports are declining and there is a need for coming out with financial instruments which will attract investors so that they do not put money in gold, which is an unproductive asset.
Food inflation was more of a structural problem and its response to monetary policy changes is relatively weak, the Mid-Year Review said, adding that the momentum of food inflation is pointing towards moderation.
It said the recent decision of the government to open multi-brand retail to foreign investment would help consumers and farmers by improving the logistical facility.
The document said agriculture is expected to improve because of better prospects with rabi crops and dominance of irrigated wheat and rice crops.
Also, it added that services sector is expected to do better, driven by the performance of real sectors.
It said the fiscal deficit roadmap announced by Finance Minister has considerably