The report calls for an end to fuel subsidies
India could achieve growth of 7% in the current year and more in coming years if the right reforms are made, a report from the finance ministry said.
The economic survey was released ahead of Monday's budget.
Among the reforms suggested was the reform of subsidies for fuel, food and fertiliser, a privatisation programme and investment in infrastructure.
Some analysts predict that the Congress Party's decisive election victory could speed up the economic reform programme.
The previous government's power-sharing arrangement meant there was political opposition to calls for reform from the finance ministry.
The Indian economy grew 6.7% in the year to the end of March 2009 but had grown by an average of 8.8% in the previous five years.
There have been warnings that the entire reform programme is unlikely to be in Monday's budget.
"It is wrong to assume everything will be announced in the budget," said Amitabh Chakraborty at Religare Securities in Mumbai. "It is the strategic intent, a clear roadmap."
The government is expected to announce a programme of greater borrowing to boost economic growth.
On Wednesday, India unexpectedly raised fuel prices by up to 10%.
The finance ministry is keen for the government to stop subsidising fuel prices. It also wants to see the restrictions on foreign investment eased.