“The year began amid the gloom of an economic downturn, but is ending with clear indicators of a vibrant economic rebound,” Finance Minister Pranab Mukherjee said outside Parliament after presenting the annual Economic Survey.

The report, traditionally unveiled a day ahead of the budget, said the upturn gives the government room to start a “gradual rollback” of $162 billion in stimulus put in place to shield the economy from the global slump. Mukherjee is expected to take the first steps toward re-embracing fiscal discipline when he presents the budget by laying out a roadmap for cutting the deficit, now at a 16-year high.

India’s economy was one of the least hit by the global crisis and has been “one of the growth engines, along with China, in facilitating faster turnaround of the global economy,” added the finance ministry 2009-2010 overview.

The report projected economic growth would reach 8.75 percent in next fiscal year to March 2011, quickening to over nine percent in the following year. That compares with estimated growth of around 7.5 percent for this year to March 20 and 6.7 growth last year when the economy was sideswiped by the global slump. “It is entirely possible for India to move into the rarefied domain of double-digit growth and even attempt to don the mantle” of the fastest-growing economy in the world within the next four years, the report said.

China, which expanded by 8.7 percent in 2009, is currently the fastest growing.

“The broad-based nature of the recovery creates scope for a gradual rollback, in due course, of some of the measures undertaken over the last 15 to 18 months,” the report added.

The survey also urged India to open up faster such sectors as health insurance, rural banking and higher education to foreign direct investment.

The survey came as a new World Bank report said South Asia appeared to have escaped the worst effects of the global economic crisis, helped by resilient domestic demand bolstered by government stimulus.

The Indian government study warned food inflation — which figures showed Thursday had eased slightly to 17.58 percent in mid-February — was a key problem and could drive up overall inflation, now at 7.3 percent.

It added other risks remained as the global trade recovery was still fragile with demand fueled by government spending. The stimulus effects could evaporate if “natural recovery” does not follow.

Indian business leaders reacted sharply to suggestions that stimulus steps, such as tax breaks, be withdrawn.