Washington: The International Monetary Fund (IMF) today (Apr 21, 2004) stressed the importance of reducing India's overall fiscal deficit.

"Clearly, the overall deficit is important. In India it is sizeable (10 per cent)," Raghuram Rajan, economic counsellor and director of research at the IMF, said addressing a press conference on the Fund's World Economic Outlook.

By overall deficit, he meant the Central and State deficit as well as the losses of the State-owned corporations.

"Part of problem in India," he said, is that "we have not seen the effects of this deficit so far, in part because private investments have been subdued."

With the growth in economy, especially the rapid growth last year, and expectation of the growth going forward, "we expect the private investment will start showing up again in significant magnitude, at which point there will be competition between the Government and the private sectors for funds, which will push up international aid more than desirable," Rajan said.

"This is why, we have been harping on the deficit. Clearly, it is the overall deficit that matters in this case."