Economic Survey

India can increase investments without borrowing more, a key government report said on Friday, in an indication that Finance Minister Arun Jaitley will stick to debt targets in his maiden full-year budget on Saturday.

The economic survey, the basis for Jaitley's budget for the fiscal year starting April 1, forecast the economy would grow by 8.1-8.5 percent under a new calculation method that makes India the world's top-growing big economy.

The survey was prepared by the finance ministry's chief economic adviser Arvind Subramanian.

Following are the highlights of the survey:

FISCAL DEFICIT

• India must meet its medium-term fiscal deficit target of 3 percent of GDP

• Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15

• Govt should ensure expenditure control to reduce fiscal deficit

• Expenditure control and expenditure switching to investment key

GROWTH

• 2015/16 GDP growth seen at over 8 pct y/y

• Double digit economic growth trajectory now a possibility

• Economic growth at market prices seen between 8.1 - 8.5 percent in 2015/16 on new GDP calculation formula

• Total stalled projects seen at about 7 percent of GDP, mostly in private sector

REFORMS

• There is scope for big bang reforms now

• India can increase public investments and still hit its borrowing targets

INFLATION

• Inflation shows declining trend in 2014/15

• Inflation likely to be below central bank target by 0.5 - 1 percentage point

• Lower inflation opens up space for more monetary policy easing

• Govt and central bank need to conclude monetary framework pact to consolidate gains in inflation control

• Consumer inflation in 2015/16 likely to range between 5-5.5 percent

FISCAL CONSOLIDATION

• Govt remains committed to fiscal consolidation

• India can balance short-term imperative of boosting public investment to revitalize growth with fiscal discipline

• Outlook for external financing is correspondingly favourable

CURRENT ACCOUNT DEFICIT

• Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of GDP in 2015/16

SUBSIDIES

• Overhauling of subsidy regime would pave the way for expenditure rationalisation

LIQUIDITY

• Liquidity conditions expected to remain comfortable in 2015/16