India growth could rise to near 6% this year: survey

NEW DELHI - India's economic growth is expected to accelerate this year and could reach nearly six per cent, a key government study said Wednesday ahead of the first national budget by the new right-wing government.

The India Economic Survey, prepared by the finance ministry, predicted growth would be in the 5.4-5.9 per cent range in the financial year to March 31, 2015, up from 4.7 per cent in the previous 12 months.

"The economy can look forward to better growth prospects in 2014-15 and beyond," said the report released on the eve of the budget from Prime Minister Narendra Modi's government which came to power in a landslide election victory in May.

The consensus forecast by private economists for growth of Asia's third-largest economy stands at around 5.5 per cent.

But a weak monsoon could mean growth would come in at the lower end of the range, the report cautioned.

The survey forecast stubbornly high inflation would also moderate by the end of 2014, which could enable the central bank to reduce steep interest rates to kickstart growth.

But the report said massive subsidies used to fund public welfare programmes posed a risk to efforts to improve the health of public finances.

The budget is keenly awaited for statements on how the government plans to revamp the economy which has been hit by two consecutive years of sub-five per cent growth and faces a yawning fiscal deficit.

The report laid out the government's priorities in the coming year, including steps to curb the fiscal deficit, restarting the investment cycle in the face of bureaucratic and other delays and improving dilapidated infrastructure.

It also included the simplification of tax policy and the repeal of other unnamed "archaic laws" that prevent economic development.