'Industrial sector has shown signs of revival. The demand for capital goods has picked up. Consumer durables recorded better growth in the first quarter,' the finance minister said, explaining the reasons behind his optimism.

The finance minister also sought to assure the assembled industrialists that the government's large borrowings programme will not crowd out investments for the private sector, nor will it nudge interest rates higher.

'In this regard, the government and the Reserve Bank of India are in constant touch so that the borrowing programme can proceed in a non-disruptive manner,' he said.

Mukherjee said the government was forced to stray from the path of fiscal prudence so that it could provide that much-needed fiscal stimulus to the economy and insulate it from the impact of the global financial crisis.

'But the roadmap for fiscal reforms for the central and state governments will be laid down. It will be in the report of the 13th Finance Commission. This report is expected shortly.'