The government expects the economy to grow 10.5% in the current fiscal year following a record contraction of 7.3% last year. It is likely to announce next year's budget on Feb. 1. India's fiscal year starts on April 1 and runs through March.
"The contact intensive sectors and construction should recover in 2022/23. Once capacity utilization improves, private investments should also recover," the seven-member council said in a statement on Thursday after its first meeting following the addition of new members including Rakesh Mohan, a former deputy governor of Reserve Bank of India.
The other council member include J.P. Morgan's Chief India Economist Sajjid Chinoy, India Strategist for Credit Suisse Neelkanth Mishra, and managing director of Kotak Mahindra Asset Management Co. Ltd Nilesh Shah.
Recent indicators such as tax collection, export growth, retail sales and power demand point towards a better than expected recovery, leading some economists to revise India's growth projection upwards.
The council cautioned that India's 2022/23 budget should not have unrealistic revenue targets and that it should include plans to spend any extra revenue to build assets.
Last year, Finance Minister Nirmala Sitharaman announced a plan to privatise a slew of state-owned companies like refiner Bharat Petroleum Corp Ltd and Shipping Corp of India. Recently, it announced the sale of national carrier Air India to Tata group.
"There should also be a clear road-map for privatization and the growth orientation of last year's budget should also be maintained," the council said.
(Reporting by Aftab Ahmed and Manoj Kumar; Editing by Bernadette Baum)