NEW DELHI: India on Friday offered a cautious forecast for economic growth to exceed 7 per cent in the next financial year, as the government prepares to present its budget with clamour for promised reforms growing.

The Economic Survey, a yearly report released by the finance ministry ahead of the national budget on Monday, said GDP would expand between seven percent and 7.75pc in 2016-17.

The relatively upbeat prediction comes despite a weak global economy, with a slowdown in China that has worried investors, other major emerging markets in recession and sinking global stocks. India’s GDP likely grew 7.6pc over the 2015-16 financial year, the government said, making it the world’s fastest-growing major economy.

However, Friday’s forecast represents a paring back of expectations from last year’s survey which predicted growth would top eight per cent this year.

“We’ve learnt from the experience of last year. The forecast for last year went wrong, maybe it was over-optimistic,” said Arvind Subramanian, the government’s chief economic adviser.

Last year’s survey did not anticipate how much weak global demand would hurt India’s exports, nor the impact of a second bad monsoon on its vast agricultural sector, he said.

“This year’s assessment is really based on looking out at the external environment which seems to be very grim,” Subramanian told reporters.

Prime Minister Narendra Modi has made it a priority to boost India’s economic growth, vital for lifting millions out of poverty, since sweeping to power in a general election in May 2014.

But investors have raised concerns about the pace of promised reforms needed to create jobs for India’s tens of millions of young people.

Economists said the wide range of the growth forecast for 2016-17 indicated the government may be hedging its bets.

“What jumped out at me is that the government’s estimate has become more cautious,” Hanna Luchnikava, senior economist, Asia Pacific at IHS Economics in Munich, told AFP.

“We do not expect any acceleration (in growth) next year, in fact the risks are to the downside,” she said.

While its growth has outpaced that of powerhouse China in recent quarters, Asia’s third-largest economy still faces challenges.

After cooling from previously high levels, India’s once exorbitant inflation has ticked up again over the past few months, with prices rising 5.7pc in January.

India’s main stocks index has lost a fifth of its value over the past year, private investment is weak and the rupee is trading at near-record lows against the dollar.

Published in Dawn, February 27th, 2016