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.

Indian Economy
A worker pulls an optic fibre cable to be laid underground along a roadside during the early morning in the western Indian city of Ahmedabad.Reuters

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

Following are the highlights of the survey:


* 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


* 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


* There is scope for big bang reforms now

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


* 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


* 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


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


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


* Liquidity conditions expected to remain comfortable in 2015/16