Suggesting a rebound, the government has projected the economy to grow by about 7.6% in the next fiscal, up from 6.9% estimated in 2011-12 on the back of declining inflation and softening interest rate.
"The growth rate of real GDP (is expected) to pick up to 7.6% (plus or minus 0.25%) in 2012-13 and faster beyond that," said the Economic Survey tabled by Finance Minister Pranab Mukherjee in Parliament.
It expects the economic growth to further improve to 8.6% in 2013-14.
The Survey said fiscal consolidation is likely to get back on track from 2012-13, when savings and capital formation will also begin to improve.
"Moreover, with the easing of inflationary pressure in the months to come, there could be reduction in policy rates by the RBI, which would encourage investment that could have a positive impact on growth", it added.
Indian economy is likely to slowdown to 6.9 per cent in 2011-12 from 8.4% in the previous two years mainly on account of global slowdown and domestic factors.
"There were also the pressures of democratic politics, which slowed reforms," the Survey said while endorsing the Central Statistical Organisation's (CSO) estimate of 6.9% growth during 2011-12.
Commenting on global economy, the survey said, it remains quite fragile and concerted efforts will be needed through G20 and other fora to restore stability.
Meanwhile, the Reserve Bank in its mid-quarterly review kept key policy rate unchanged and said future policy action would be determined by the movement in inflation.
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