India can potentially achieve an average economic growth rate of 7.8 percent and help eradicate poverty by implementing reforms that boost job creation in the non-farm sector and increase productivity in agriculture, McKinsey Global Institute said in a new report.
India's economy, the third biggest in Asia after China and Japan, grew 4.5 percent in the 2012/2013 fiscal year, slowing from 6.7 percent in the previous one.
(Read more: India's finance minister unveils tax cuts in budget)
Sluggish economic growth, high inflation, and a failure to implement long-term economic reforms have hurt the appeal of local assets in the past year and put India in the 'fragile five' category of emerging markets seen as most vulnerable to an unwinding of U.S. monetary stimulus.
In its report released Thursday, McKinsey said it had developed a new metric called the empowerment line, which determines the level of consumption needed for a person to fulfill basic needs that include food, housing and drinking water, sanitation and health care.