India should start fiscal consolidation beginning in April by reforming spending, eliminating its revenue deficit, and putting a cap on 
government debt, a finance ministry report said on Thursday.

KEY POINTS: - 2010/11 GDP growth seen at 8.25-8.75 per cent - FY10 deficit target can be met by spending curbs despite revenue shortfall

- Favours cut in factory gate taxes to make exports, industry more competitive

COMMENTARY: A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP, MUMBAI:

"The survey reflects the government's view that inflation is driven by supply side pressure, but also acknowledges that demand side pressure is picking up. There is an intention to target subsidies on a more optimal manner. However, one needs to see some movement on subsidies for any meaningful improvement in fiscal consolidation."

MARKET REACTION: The 30-share BSE stock index was unchanged after the economic survey. At 11:22 a.m. (0552 GMT), it was trading down 0.36 per cent at 16,196.46 points.

BACKGROUND: - India's Central Statistical Organisation estimates GDP growth at 7.2 per cent for the 2009/10 fiscal year. Finance Minister Pranab Mukherjee has pegged growth at 7.75 per cent.

- India's central bank has raised its projection for wholesale price inflation to 8.5 per cent by end-March and policymakers say it should start easing by July.