"Economic growth has in fact declined much more steeply than what is warranted by the decline in investment. This might be because projects have not been completed in time or complementary investments have not been forthcoming," Prime Minister's Economic Advisory Council chairman C. Rangarajan said here.
In some cases this could also be due to non-availability of critical inputs such as coal and power, he said, addressing the convocation at the Indian Statistical Institute.
It should not be surprising if the revised growth rate, to be announced later, could be 1 per cent higher than the one indicated earlier, he said, adding that the growth rate has been moderate in both 2012-13 and 2013-14 fiscals.
The results of the Annual Survey of Industries released last week indicated that the growth in industrial sector could be substantially higher than what was indicated earlier, C. Rangarajan said.
Pointing out that the potential rate of growth of the Indian economy still remained high, he said: "Even today, saving and investment rates are at high levels.
"It reassures us that if we are able to find ways to complete the projects speedily, we shall be able to usher in rapid growth in income even in the short run."
He said actions such as the constitution of the Cabinet Committee on Investments should be able to usher in rapid growth in income even in the short run.
C. Rangarajan said: "While even the existing level of investment rate should enable us to grow at 7.5 per cent in the short run, provided we take appropriate actions to speedily complete projects, a return to higher level of savings and investment can take us back to the very high levels of growth which we had seen earlier."
Raising the savings rate through fiscal consolidation had become imperative, he said, adding that the improving productivity of capital was the crux of the problem.
On the global financial crisis, he said the Indian economy was able to protect itself reasonably well in the turbulent conditions and the recovery was swift and sharp.
C. Rangarajan credited the structural changes that occurred in the Indian economy over the last two decades for imparting greater resilience to the system and making the economy more competitive.
Under the severe impact of the global crisis, the Indian economy had registered a growth rate of 6.2 per cent in 2008- 09 after growing at a rate exceeding 9 per cent for three consecutive years, he said.
In the last 2012-13 fiscal, however, it fell to 5 per cent. In October, the Reserve Bank lowered the economic growth forecast for the current financial year to 5 per cent from 5.7 per cent projected earlier.
The economy expanded 4.8 per cent in the second quarter of 2013-14, pulling up GDP growth in the first half to 4.6 per cent.