The Indian economy, the Survey said, appears to have gone past the slowdown, persistent inflation, elevated fiscal deficit, slackening domestic demand, external account imbalances and oscillating value of rupee.
Saying that inflation has been on a downward trajectory between April-December, it projected the consumer price inflation at 5-5.5 percent for 2015-16.
The declining inflation and a significant improvement in current account deficit (CAD), which is expected to come down to 1 percent of GDP in 2015-16, have made India an attractive investment destination, it said.
Private investments must remain the primary engine of long run growth, the Survey emphasised, adding that "public investment, especially in the Railways, will have to play an important role at least in the interim, to revive growth and to deepen fiscal connectivity".
In a separate chapter on 14th Finance Commission, the Survey quoted both first Prime Minister Jawaharlal Nehru and current PM Narendra Modi, to emphasise that adoption of FFC recommendation and creation of NITI Aayog would promote government's cooperative and competitive Federalism.
Recalling the golden rule of fiscal policy, it said the government should borrow to finance investment and not to fund current expenditure. It urged the government to bring down fiscal deficit to 3 percent of GDP.
Referring to subsidies, it said they were estimated to be Rs 3.78 lakh crore or 4.24 percent of the GDP.
"They (Subsidies) may not be the government's best weapon for fighting poverty," it said, adding that often rich households benefit more from subsidies than a poor one.
The Survey said the adoption of JAM number Trinity -- Jan Dhan Yojana, Aadhaar and Mobile -- would help in delivering subsidies to the poor in a targeted and less distorted manner.
Dwelling on the issue of manufacturing versus services, it said, "both are equally important in the Indian context... Similarly 'Skilling India' is no less important and deserves an equal importance as the other important goal of Make In India".
It, however, expressed satisfaction that the number of stalled projects have plateaued and called for revitalising public private partnership model of investment to boost investment.
