New Delhi, Feb 25 (IANS) India's gross domestic product (GDP) can expand by double-digit levels to emerge as the fastest growing economy in the world by 2014, even as spiralling prices remains the immediate concern, says the Economic Survey for this fiscal.

"It is entirely possible for India to move into the rarefied domain of double-digit growth and even don the mantle of the fastest-growing economy in the world within the next four years," said the survey, a day ahead of the federal budget.

"The Indian GDP can be expected to grow around 8.5 percent (plus or minus 0.25 percent), with a full recovery, breaching the 9 percent mark in 2011-12," said the survey tabled by Finance Minister Pranab Mukherjee in the Lok Sabha, the lower house of parliament

"In the medium term, it is reasonable to expect that the economy will go back to the robust growth path of around 9 percent that it was before the global crisis slowed it down in 2008."

The survey said there were several reasons to suggest that the India's economic fundamentals remained strong, including high savings and investment rate, the arrival of home-grown companies in the global space and the dream run for the services sector.

At the same time, agriculture continues to be the cause for concern even as it remains the mainstay of the Indian economy, with the bulk of its workforce dependent on farming, either directly or indirectly.

"There is need to undertake serious policy initiatives to reach the government's target of sustained 4 percent growth in this sector."

The survey also expressed concern over rising prices, especially in essential items that has pushed the country's annual food inflation, based on wholesale prices, to nearly 18 percent in recent weeks.

"As of now the outlook for inflation is conditioned by supply-side pressures in the near term," said the survey while also making a veiled criticism in the manner in which the government has sought to tackle rising prices.

"Making available adequate and timely quantities of these items and at different locations to overcome supply side mismatches is the real challenge," the survey noted, adding in some essential items there were ample stocks.

The annual report card also said the current rebound in growth called for the gradual withdrawal of the $37-billion stimuli since December 2008 to help the country weather the ills of global slowdown.

"The largely structural nature of fiscal deficits in India, the levels of recovery in the economy and the sustainability of the recovery without fiscal stimulus call for resumption of process of fiscal consolidation in a gradual manner."

At the same time the export sector needed a further push, even as it said that the outlook for India's merchandise trade has brightened in 2010 with the prospects of a recovery in world output and trade volumes.

"While in the short-term, stimulus measures have worked, some fundamental policy changes are needed. For the merchandise sector these include furthering tariff reforms by lowering the peak duties from the present 10 percent to 7.5 percent."