New Delhi: Highlighting the danger signals in the economy, the World Bank on July 21 warned that the eight per cent growth target would not be achieved without a major revamp of the precarious fiscal situation.

Cautioning that primary deficit and public debt were worse than 1991 levels when the country faced a major crisis, the World Bank said India's fiscal situation was worse than that of many countries, which faced macroeconomic crisis.

Stressing on the need to give utmost importance to fiscal reforms, the bank prescribed reforms in tax and subsidy regime, financial sector and fiscal management system and on improved composition of public expenditure, a large portion of which currently goes for pension and subsidies.

Though the risk of crisis in India was offset by strong external position, the bank's first 'India Development Policy' review expressed concern on the consequences (of worsened public debt and rising primary deficit) over the medium term.

"It will not be prudent to assume that India can simply grow out of its fiscal problem. Overall, fiscal reform is of utmost importance," it said.

The World Bank, however, noted that the country has made rapid stride in increasing incomes and improving living standards in the past one decade.

PTI