Indian Finance Minister Arun Jaitley.

New Delhi - India's economy is expected to grow by up to 5.9 percent in the current fiscal year, the new government of Prime Minister Narendra Modi said in a major economic report on Wednesday that called for fiscal consolidation to bring down inflation.

The report, presented to parliament one day before Finance Minister Arun Jaitley delivers his maiden budget, also warned of a downward risk to growth due to weak monsoon rains, and set the lower end of the growth spectrum at 5.4 percent.

It recommended slashing subsidy spending and widening the tax base to control India's wide fiscal deficit.

Many economists expect Jaitley to raise the planned budget deficit to 4.3-4.5 percent of gross domestic product in the year to March 2015.

The previous government had set a deficit target of 4.1 percent of GDP that is viewed by economists as unrealistic because, three months into the fiscal year, it has already reached nearly half that level.

Modi won a landslide general election victory in May with a pledge to boost growth and create jobs for the 1 million people who enter India's workforce every month.

Asia's third-largest economy has been stuck in its longest rut in a quarter of a century - with growth stuck below 5 percent - while Modi's government has been dogged by a food price scare in its early weeks. - Reuters