The Economic Survey tabled by Finance Minister Arun Jaitley says the economy is likely to grow in the range of 5.4 to 5.9 per cent in 2014-15, overcoming the sub-5 per cent GDP growth of past two years, even as poor monsoon and disturbed external environment remain a cause for concern.
"The growth slowdown in the last two years was broad based, affecting in particular the industry sector. Inflation too declined during this period, but continued to be above the comfort zone, owing primarily to the elevated level of food inflation", said the Survey tabled on Wednesday.
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The Survey, released a day ahead of the Budget for 2014-15, expects that moderation in inflation will ease the monetary policy stance and revive the confidence of investors.
"...with the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2014-15 and beyond," it said.
As regards the downside risks, the Survey lists factors like poor monsoon, the external environment and the poor investment climate. They can have a bearing on the growth recovery, it added.
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After recovering in 2009-10 and 2010-11, GDP growth slowed down to decade's low of 4.5 per cent in 2012-13. It picked up marginally to 4.7 per cent in 2013-14.
The Survey further said the measures taken by the government to improve investment climate and improve governance could push up growth to 7-8 per cent in the coming years.