Economy Survey highlights - Growth to top 8 percent in 2015/16

REUTERS - 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 (Compiled by Tony Tharakan and Rupam Jain Nair in NEW DELHI)