Prime Minister Atal Bihari Vajpayee said on Saturday the economy was on course to achieve its target of 8 per cent growth during the next five years compared with current levels of 5.5 per cent.
Vajpayee said a high fiscal deficit remained a big worry and called to curb it by mopping up higher revenues and cutting subsidies, a politically sensitive issue that has rocked his fragile coalition in the past.
"There is no need to wonder whether it is at all feasible for us to climb from the growth rate of 5.5 per cent last year to 8 per cent during the Tenth Five-Year Plan," Vajpayee told the 50th annual meeting of the National Development Council.
"Our economy has shown great resilience in the face of adversity, both domestic and global. Already trends of revival and growth are visible in many sectors."
India's five-year plans are a relic of its socialist past and are inspired by a similar model in the former Soviet Union. The 10th Plan period started this year.
Vajpayee's government said earlier this month it expected the economy to grow by 5.0 to 5.5 per cent in the current year to March 2003 with a severe drought seen denting output and widening an already yawning fiscal deficit.
The government had earlier estimated this year's gross domestic product would grow six per cent from last year.
The Indian economy, the world's 12th largest, grew by 5.4 per cent in the previous fiscal year.
Analysts say the country, the world's second-most populous, needs double digit growth to wipe out poverty.
"Our biggest worry for quite some time has been the management of the fiscal deficit, at both central and state levels," Vajpayee told the meeting attended by central ministers, state chief ministers and senior bureaucrats.
"To ensure fiscal consolidation at both levels we need to enhance revenues and address the problem of untargeted, runaway subsidies."
The prime minister said the country would also face a 'worrisome increase' in unemployment if it did not accelerate economic growth.
India's fiscal deficit -- one of the largest in the world -- is expected to be 5.3 per cent of GDP in the year to March 2003 and the country's worst drought in 15 years and extra spending on food and fertiliser subsidies are expected to widen the gap.
The combined fiscal deficit of the central and state governments is about 10 per cent of GDP and several states are finding it difficult to even pay their employees.
International rating agencies say India's fiscal deficit is the biggest obstacle in the way of the economy realising its full potential.