Global credit rating agency Moody's has forecast a 7% growth for the Indian economy in 2014, signalling a turnaround in the perception of the economy, which until recently, was the target of criticism by global research agencies for its precarious state of public finances.
It, however, warned that achieving double-digit growth rate was "wildly optimistic" unless significant structural reforms measures were taken.
"Some government policymakers, most notably RBI governor D Subbarao, have begun pushing for a return to double-digit growth. This is wildly optimistic and, without significant structural reform, a dangerous view to take," said Moody's Analytics, an arm of Moody's.
India's economic growth is set to slump to a 10-year low of 5% in 2012-13, fuelling fears of a widespread slowdown as factories and farms produce less, exports shrink, companies offer fewer jobs and prices continue to remain high.
The advance estimates of India's gross domestic product (GDP) - or the value of all goods and services in the country - put out by the Central Statistics Office (CSO) on Thursday comes at a time when the government is caught in a tug-of-war between rising prices and sliding growth, and is struggling to halt the slide in the economy.
The alarmingly slow growth, worst since the drought-year of 2002-03, will also imply that India will no longer remain the world's second-fastest growing major economy behind China.
China's economy grew 7.9% in 2012 while estimates put Indonesia's growth at over 6% last year.
The government has projected a growth rate of 6.1-6.7% for 2013-14 in the budget.
"These projections assume that monsoon is normal, the rate of inflation declines further and that the anticipated mild recovery of global growth rate takes place," said the medium-term fiscal policy statement placed along with the budget.