India could see growth this year of roughly 7 per cent and then resume the faster expansion of recent years, provided it makes sweeping reforms including removal of fuel subsidies and accelerates infrastructure development, economic survey report said.

The economic survey prepared by the finance ministry, released ahead of Monday's budget announcement for the fiscal year ending in March 2010, said inflation is no longer a worry and called for an urgent return to the targeted fiscal deficit of 3 per cent.

India's fiscal deficit ballooned to 6.2 per cent in 2008-09 as the government unleashed stimulus spending to insulate the economy against the global downturn.

The finance ministry's snapshot of the economy was largely upbeat and said the outlook for a resumption in the medium term to India's robust rate of growth before the global economic downturn was achievable if the government embraces reforms.

"India should be back on the new trend growth path of 8.5 to 9 per cent per annum provided the critical policy and institutional bottlenecks are removed," the report said.

The Indian economy grew at 9 per cent or more in the three years that ended in March 2008. "It is therefore imperative that the government revisit the agenda for pending economic reforms in the first instance with a view to renew the growth momentum," the report said.

While earlier reform calls from the finance ministry were blocked due to political opposition amid the previous government's power-sharing agreement with the left, prospects for liberalisation of the economy are brighter after the Congress party won a decisive election result in May.

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