India's economic slowdown appears to have bottomed out and growth is expected to gain steam in the current fiscal year, a report by a group advising the government on economic policy, said Tuesday.

Releasing a review of the economy in 2012-13, Chairman of the Prime Minister's Economic Advisory Council Chakravarthy Rangarajan said the economy can achieve faster growth if bottlenecks in investment are resolved. He highlighted the need to address speedy clearance of projects and managing the capital account.

Although financing the current account deficit has not been a problem, the government has to bring down the deficit to moderate level and it remains a source of concern, Rangarajan added.

Gross domestic product is forecast to grow 6.4 percent in 2013-14, up from 5 percent in the previous year, which was the slowest pace in a decade. Rangarajan hinted that estimate for 2012-13 might be lifted upwards.

In February, the government had forecast 6.1 percent to 6.7 percent growth for the current fiscal.

The Asian Development Bank sees only 6 percent growth for the fiscal ending March 2014 and the Washington-based International Monetary Fund projects 5.7 percent growth for 2013 and 6.2 percent expansion for 2014.

While even existing rates of investment should enable the economy to grow at 7.5-8 percent over the short term, a return to higher levels of savings and investment can take it back to the very high levels of growth, said Rangarajan.

The report projects industrial growth at 4.9 percent in 2013-14 and manufacturing to expand 4 percent. The service sector output is forecast to rise 7.7 percent.

In expectation of normal or mostly normal monsoon, the farm sector output is expected to grow 3.5 percent in 2013-14.

The panel forecast the current account deficit to narrow to 4.7 percent of GDP in 2013-14 from an estimated 5.1 percent in 2012-13.

The economic adviser said the budget presented late February has laid firm foundations for the process of fiscal consolidation, which should help in achieving high growth in a sustained way. The government has estimated the fiscal deficit at 5.2 percent of GDP.

In 2013-14, the headline wholesale price inflation is expected to be around 6 percent, with primary food inflation around 8 percent and fuel at about 11 percent. The panel said inflation is coming down and it will create more room for monetary policy to support growth.

At its upcoming meeting on May 3, the Reserve Bank of India is expected to reduce its key rates by a quarter point.

RTTNews