New Delhi, July 9 (Reuters): The economy is expected to grow by up to 5.9 per cent in the current fiscal year, Finance Minister Arun Jaitley said in the annual Economic Survey released a day ahead of the Budget for 2014-15.
The report calls for fiscal consolidation to bring down inflation, warns of a downward risk to growth due to weak monsoon rains, and set the lower end of the growth spectrum at 5.4 per cent.
It recommended slashing subsidy spending and widening the tax base to control India's wide fiscal deficit. Many economists expect Jaitley to raise the planned budget deficit to 4.3-4.5 per cent of gross domestic product in the year to March 2015.
The previous government had set a deficit target of 4.1 per cent of GDP that is viewed by economists as unrealistic because, three months into the fiscal year, it has already reached nearly half that level.
Modi won a landslide general election victory in May with a pledge to boost growth and create jobs for the one million people who enter India's workforce every month.
Asia's third-largest economy has been stuck in its longest rut in a quarter of a century - with growth stuck below five per cent - while Modi's government has been dogged by a food price scare in its early weeks.