India’s economy will grow by more than eight percent in the next financial year, the government said in a report published Friday, a day ahead of its first full-year national budget.
The India Economic Survey said growth would be between 8.1 and 8.5 percent in the 2015/16 financial year, returning to levels last seen in 2010/11.
The upbeat forecast came weeks after the government put growth for the current financial year at 7.4 percent, making India one of the world’s fastest-growing economies, after changing the way it calculates its Gross Domestic Product.
The figures surprised many economists as India had been thought to be in its worst economic slowdown since the 1980s.
The survey also forecast India’s consumer inflation would moderate to between 5 and 5.5 percent in 2015/16, raising hopes for some monetary policy easing.
India’s once high prices have been steadily cooling since the new government won the biggest mandate in 30 years at last year’s elections, partly thanks to dipping global crude prices.
The finance ministry said the data showed the timing was right for the reforms to India’s economy promised by Prime Minister Narendra Modi.
“As the new government is to present its first full-year budget, the Economic Survey states that it appears that India has reached a sweet spot and that there is a scope for Big Bang reforms now,” it said in a statement.
Modi stormed to power in general elections last May on pledges to reform and revive the ailing economy and attract much-needed foreign investment.
He has promised to slash red tape, reform tax and overhaul land acquisition laws to try to attract foreign investment and create jobs for millions of young people.
Investors will be looking to Saturday’s budget for specifics on much-trumpeted reforms such as Modi’s “Make in India” campaign, designed to turn the country into a manufacturing hub, and plans to improve shoddy infrastructure.
The government’s figures are higher than those released by US-based ratings agency Moody’s in a recent report that said India’s economy would grow by nearly 7.0 percent in 2016.