Date:13/03/2004 URL: http://www.thehindu.com/2004/03/13/stories/2004031303081600.htm

Business

IMF warns against high fiscal deficit

NEW DELHI, MARCH 12. Warning that the combined fiscal deficit of the Centre and the States at 10 per cent of gross domestic product (GDP) was `alarmingly high', the International Monetary Fund today said Indian political leadership should rise to the occasion to control the runaway deficit.

"There is room for expenditure control, and revenue mobilisation efforts needed to be stepped up," IMF Chief Economist, Raghuram Rajan, said attributing the huge fiscal deficit to failure of the Government to arrive at a political consensus on reforms. "Indian political leadership will have to rise to the occasion to get rid of the huge fiscal deficit," Mr. Rajan told the India Today Conclave here.

He also said that the country lacked the `political will' to move on to the high growth trajectory. He was non-committal if the high 8 per cent growth would be sustainable saying the economy was growing on an average at a slow rate.

Touching upon reforms, he said India needed flexible laws and bankruptcy code to have a proper exit policy.

— PTI