New Delhi: Observing that economy was "going well" in India, which has large internal markets, the World Bank said today (Jan 29, 2004) that growth had to be labour oriented, even as it expressed concern over the mounting fiscal deficit.

"Despite fluctuations in rich countries, growth in South Asia, including India, has not been affected because of the self-perpetuating growth, largely due to large size of internal market," World Bank chief economist Francois Bourguigonon told reporters in New Delhi.

He said China and India had high potential for internal markets, which would feed future growth.

Elsewhere in the world, the economic performance was dependent on the global scenario, he said, citing the mounting current account deficit of the US.

Highlighting that China has been joined by India on the economic growth, Francois said it "has to be labour oriented".

He expressed concern over large fiscal deficit and rising public debt, which would increase the cost of servicing the debt.

"Accrual of fiscal deficit is more important than fiscal deficit and debt level should be sustainable," he said when asked what was the optimal level of deficit.

On the over $ 103 billion foreign exchange reserves of the country, Francois said, "I don't see too many problems in this accrual."

However, he said there were views that forex accumulation in countries like India and China were one of the reasons for the depreciation of the US Dollar; other reason being cited is the growing current account deficit in the US.