The Economic Survey 2008-09 today forecast a growth rate of 6.25-7.75 per cent for the Indian economy during the current financial year (2009-10), provided the US economy “bottoms out” by September 2009.

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The survey assumes normal monsoon which translates to 3 per cent growth rate in agriculture, which constitutes around 17 per cent of the country’s Gross Domestic Product (GDP).

“The pattern of fiscal 2008-09 may be repeated in that case (referring to the US economy recovering by September), though in an inverse sequence, with two not-so-good quarters followed by two good quarters making a “U”–shaped revival of the growth path,” the survey said.

However, if there is a delay in global recovery, Asia’s third largest economy might register only 6.25 per cent growth rate in 2009-10.

In 2008-09, the economy grew at 7.75 per cent in the first half, and fell to 5.8 per cent in the second half because of contraction in farm output and a sharp fall in the growth rate of manufacturing and construction.

Recovery in the second half of 2009-10 is also based on the assumption that private consumption, which accounts for nearly 60 per cent of GDP, will pick up by then. Private consumption contributed only 27 per cent to growth in 2008-09, a sharp fall from 53.8 per cent in the previous year.

Significantly, the survey said the global economic crisis has created a situation where India could possibly experience “current and capital account surplus” for the first time since 2003-04. This is based on an assumption that capital flows would turn positive, coupled with declining trade deficit and higher invisible account surplus (which tracks remittances).

In the medium term, the survey recommended revisiting pending economic reforms to put the economy back on the trend growth path of 8.5-9 per cent. It suggested limiting subsidies on LPG and listing state-owned units to generate Rs 25,000 crore of revenue per year, among others, as some possible economic reforms.

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