Industry is driving India's economic growth

In its annual economic survey, India's Ministry of Finance said the current level of growth was "likely to continue for some years to come".

Despite surging oil prices over the last year, the country's main inflation measure would stay below 5%, it added.

But the report warned that a lack of infrastructure was holding back growth.

Risks ahead

"India's growth prospects are intricately intertwined with the rapid development of physical infrastructure such as power, roads, ports and airports," it said.

India's economy has consistently grown at over 7% a year

It said industrial growth was being constrained by inadequate output from the coal, electricity, steel, cement and oil refining sectors.

India's economy has now grown at an average rate of 7% over the last four years, mainly driven by the services and industry sectors, but farming output has added impetus recently after some good monsoon rains.

Analysts said the Finance Ministry report, which comes a day before the government presents its annual budget, pointed to some risks ahead.

"Growth momentum remains strong and that should lead to higher inflation and interest rates," said Suchita Mehta, chief economist with Standard Chartered Bank in Mumbai.