Emphasising that India cannot take the external environment for granted, the Survey said the country is exposed to shifts in risk tolerance of global investors.
Another external risk is that India's import bill is strongly tied to the price of oil. "Globalisation of the Indian economy has helped raise growth, it has also meant greater vulnerability to external shocks. A focus on domestic macroeconomic re-balancing will help reduce vulnerability," said the Economic Survey 2012-13, which was tabled by Finance Minister P Chidambaram in Parliament.
It is unlikely that the support to Indian growth from the global economy would be significant, it added. "India cannot take the external environment for granted, and has to move quickly to restore domestic balance," the survey said.
"The government is committed to fiscal consolidation. This along with demand compression and augmented agricultural production should lead to lower inflation, giving the RBI the requisite flexibility to reduce policy rates," it added.
It also said that global recovery would depend on risks managed from the US fiscal adjustment and Eurozone area.
Crisis in the Eurozone has become deep, structural and multifaceted, despite several rescue packages over the last two years, posing a major downside risk to the global outlook.
The survey has claimed the "downturn is more or less over". The pre-Budget Economic Survey has also projected an optimistic 6.1 to 6.7 per cent growth in the next fiscal and made a strong call for cutting subsidises.
While pegging the GDP growth at an estimated 5 per cent for the current fiscal, the Survey said: "...the overall economy is expected to grow in the range of 6.1 to 6.7 per cent in 2013-14" as the economy is looking up.''