Washington: The International Monetary Fund (IMF) on April 10 said perhaps the single most critical issue for India is how to take growth up to the rates that are necessary to reduce poverty in the medium term.

"A second important issue relates to India's very large fiscal deficit. We need to have the fiscal deficit brought down to get a sustained level of growth," deputy director of IMF's research department David Robinson told reporters.

He said the two issues were related.

"There is still a lot of room for structural reforms. Government has made a lot of progress in this regard, example opening economy to foreign investment and so on, but other needed reforms have gone less far, particularly privatisation, passage of fiscal responsibility legislation and so on," he added.

Robinson said the fundamental key issue has been the high level of fiscal deficit – 10 per cent of the gross domestic product (GDP). "That has to be brought down to sustainable levels," he said.

IMF's economic counsellor and director of research Kenneth Rogoff said this year the World Economic Outlook quantified benefits developing nations could derive by better governance, reducing corruption and granting political rights.

"The absence of these and other factors hold back growth in developing countries," he said. However, Outlook does not imply these are the only things that need to be done, he said.

"We strongly endorse higher aid being given to developing economies. We think it is terribly important that industrialised countries open up their agricultural markets to the poor countries of the world," he added.

PTI