India's economy could grow over 8% in the financial year beginning 1 April 2015, a key report on the state of Asia's third-largest economy showed.
The India Economic Survey, which was tabled in parliament by finance minister Arun Jaitley, said GDP growth could hover between 8.1% and 8.5% in fiscal 2015-16, under a new calculation method that makes India the world's fastest-growing big economy. Growth in the fiscal year ending 31 March is expected to hover at 7.4%.
The government report, compiled by Arvind Subramanian, a renowned development economist, suggested the Indian economy was building momentum.
The report, delivered a day before Jaitley presents his maiden full-year budget in parliament, said India was on track to hit double-digit growth rates.
The report also said that inflation was on a declining trend and that it could undershoot the central bank's target of 6%, by January 2016, by 0.5-1 percentage point.
That, the report said, should create room for the Reserve Bank of India (RBI) to cut interest rates further, a move that will stimulate growth.
The report also expressed concern over stalled projects countrywide, with the total stock of stalled projects constituting about 7% of GDP. To reduce the backlog of stalled projects, the Survey advocated the revival of public investment in the short-term.
"India has reached a sweet spot and...there is a scope for Big Bang reforms now," the report said.
"A clear mandate for reform and a benign external environment now is expected to propel India on a double-digit trajectory," the Economic Survey added.
Jaijit Bhattacharya, partner, infrastructure and government services, at KPMG India, said in a note: "It is welcome to see that the Economic survey is targeting elimination of revenue deficit and laying out a fiscal discipline wherein borrowings will be done for only capital investments. It is also heartening to note that the economic survey believes that the worst for the economy is clearly over and that the economy is on an upswing...
"The goal of 8% growth in the coming year appears audacious but achievable, especially with the new statistical basis for measuring GDP.
"However, muted export growth is an area of concern and unless India becomes more competitive, it would be difficult to grow exports in a world that is slowing down overall. Railways will have a key role to play in improving the competitiveness of the economy and hence rapid modernization of the Indian railways would be key.
"The role of ecommerce and modern retail in improving the competitiveness of the economy was not clear from the survey....
"Even though IT and ITES is slowing down, it continues to be one of the largest employers in India. India needs to grow in other industries which could be job generators."
"The survey recommends growing the forex reserve...to $1tn over a period of time. It would be more prudent to put the target for forex reserve in terms of months of forex exposure that India would have, including imports and repayments.
"The survey indicates that the government is bearing a very large subsidy bill, with the food subsidy bill being one of the largest. It would be imperative to taper off the subsidies over a period of time to support deeper structural reforms. The social pressures for supporting the underprivileged while balancing the short term imperative of boosting public investment and not upsetting the fiscal discipline continues to be a challenge," he said.