NEW DELHI” India's economy has turned around and could grow by over 7.75 percent this year, the government said Friday, but warned surging food inflation was hitting the "common man" and must be tackled fast.

"The clouds of uncertainty (about economic growth) have lifted," the finance ministry said in a review of Asia's third-largest economy submitted to parliament that surveyed the first half of the fiscal year.

"The macro-economic situation confirms signs of a turnaround," said the report which underscored India's new role in helping spearhead global economic recovery.

But the report added the Congress-led government, re-elected in May on a pro-poor agenda, was worried about rising food prices -- traditionally a potent political trigger -- and said the issue must be addressed on an "urgent basis".

"The rise in the prices of primary articles of consumption of the common man observed in recent times is indeed a cause of concern," said the report presented by Finance Minister Pranab Mukherjee.

Food inflation hit a more than decade high of 19.95 percent for the week ended December 5 from a year earlier on the back of the weakest monsoon in nearly four decades that hit crop output, data showed this week.

Prices of staples like potatoes have surged 136 percent from a year earlier while pulses cost 40 percent more.

On Wednesday, opposition lawmakers forced parliament to adjourn as they staged a raucous protest against the food price rises.

The food price rise has pushed overall inflation to a 10-month high of 4.78 percent in November, prompting predictions by analysts that the central bank may soon raise interest rates to check inflation.

However, the finance ministry report said the increase in food prices could be tackled by boosting supplies.

It sought to play down any need to raise rates quickly from record lows and highlighted a need to ensure economic recovery is firmly entrenched.

The timing of the withdrawal of government stimulus measures "will depend on the strength of the recovery and its sustainability," the report said.

The government has already "taken a number of important measures to improve the domestic availability of essential commodities," said Mukherjee, who has suggested the government may also increase food imports to boost supplies.

The upbeat growth outlook came after India late last month posted 7.9 percent expansion in the second fiscal quarter, the best numbers in 18 months, propelled by government spending and record low interest rates.

A government economic survey in July forecast growth for this financial year ending in March could be around seven percent -- plus or minus 0.75 percent.

But the latest review said growth was likely to be in the upper band of the range "and may exceed it," spurred by expansion in industry and services.

"Indicators confirm recovery of almost the entire economy," said the report.

The growth "is a remarkable achievement given current global conditions," said Chandrajit Banerjee, director-general of the Confederation of Indian Industry, who at the same time argued against a quick end to stimulus measures.