The Economic Survey for 2015-16, which was tabled in Parliament today, also made a case for carrying forward the reform process to achieve macro-economic stability.
New Delhi: Three days before the budget, the Economic Survey on Friday pegged the country's economic growth at a conservative level of 7-7.75 percent for the next fiscal, while pressing for more reforms, subsidy cuts and sticking to fiscal consolidation timetable.
In contrast, the Survey of last year had project growth rate level of 8.1-8.5 per cent for the financial year 2015-16, ending March 31.
Tabled by Finance Minister Arun Jaitley in Parliament, the Survey also said that "credibility and optimality" favours sticking to next year's deficit target of 3.5 percent of GDP.
It also called for expeditious implementation of the Goods and Services Tax (GST), which it described as an unprecedented reforms measure.
The Survey projected a growth rate of 7-7.75 percent for the next fiscal as compared to 7.6 percent expected in 2015-16, with downside risks from the weak global economic scenario.
It further said that the country would take a "couple of years" to achieve 8-10 per cent GDP, considered by experts as India's potential growth rate.
The next fiscal, it said, will be "challenging" as the government will have to allocate additional resources for implementing the Seventh Pay Commission award.
However, it projected the inflation to decline to 4.5-5 percent in the 2016-17, within the Reserve Bank of India's target, while the current account deficit would remain low at 1-1.5 percent of the GDP.
Also, it said, low inflation has taken hold and confidence in price stability has improved. Prospect of lower oil prices -- around USD 35 per barrel as compared -- over medium term is likely to dampen inflationary expectations.
The Survey said the rupee's value must be fair, avoiding strengthening. Fair value, it said, can be achieved through monetary relaxation.
Stating that gradual depreciation in rupee can be allowed if capital inflows are weak, it said India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China.
The pre-Budget document also proposed widening the tax net from 5.5 percent to more than 20 percent and favoured a review and phasing out of tax exemptions.
It projected capital requirement for banks at around Rs 1.8 lakh crore by 2018-19.
The government, it said, should sell off certain non financial companies to infuse capital in state-run banks.