The economy is likely to grow in the range of 7.25% to 7.75% in the fiscal year ending March 2012, the finance ministry said in a report presented in Parliament on Friday.
In February, the government had projected the full year economic growth at 9%.
The revision comes after the economy grew an annual 6.9% in the quarter ending September, its slowest pace in more than two years.
With less than four months of 2011-12 still remaining, economists say the full-year fiscal gap may be almost one percentage point higher than the budgeted target of 4.6% of GDP.
'There can be no denial that meeting the target (of fiscal deficit) will not be easy this year,' the finance ministry said in its review, without giving a revised forecast.
With policy inertia, stubbornly high inflation, rising interest rates and crisis-hit global capital markets taking a toll on investment and consumer demand, analysts are predicting a gloomy scenario for Asia's third largest economy.
The government also said that the Rs 40,000 crore stakes sale target in state-run companies would be hard to achieve this fiscal year, while tax receipts would suffer from the impact of the global slowdown.