India's economy could grow six percent this year, 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 5.4% and 5.9% in the financial year 2014-15, up from 4.7% in the preceding year.

However, the Survey warned that weak monsoon rainfall could restrict growth to 5.4% in the fiscal year 2014-15. The June-September monsoon accounts for 70% of India's rainfall and irrigates more than half its farmland.

The government report called for a simplified tax regime comprising a single-rate goods and services tax (GST), fewer exemptions in direct taxes and a transformation of tax administration.

The report, delivered a day before Jaitley presents his maiden budget in parliament, also stated that producer prices are expected to moderate by end-2014.

Lower inflation will persuade the nation's central bank to reduce interest rates, a move that will stimulate growth.

"India needs sharp fiscal correction ... Improvements on both tax and expenditure are needed to obtain high quality fiscal adjustment," the Survey noted.

"It is better to achieve fiscal consolidation partly through a higher tax-GDP ratio than merely through reduction in the expenditure to GDP ratio, in view of the large unmet development needs."

"Restoring economic freedom of farmers and allowing them to be part of a competitive national market is essential for controlling food inflation," it added.

Nirakar Pradhan, Chief Investment Officer at Future Generali India Life Insurance, said in a note: "The focus on fiscal consolidation and inflation shows the government's focus on the two main risks for the Indian economy.

"Going forward, if monsoon behaves, there will be nothing to worry about. 2014/15 GDP growth pegged between 5.4% to 5.9% is good, as it shows we will break the trend of sub-5% growth rate seen over the last [two] years. One should expect GDP growth to reach about 8% in the next [two] years."

The Indian economy expanded by 4.7% in the financial year 2013-14, the second consecutive year of sub-5% growth, resulting in the worst slowdown for more than 25 years.