Friday, April 7 2006 18:11 Hrs (IST) - World Time -

New Delhi: Finance Minister P Chidambaram has ruled out full convertibility of the rupee before 2009, saying revenue deficits would have to be wiped out first in the economy.

"I don't think in any event we will be ready until we can wipe out the revenue deficit and bring down the fiscal deficit to three per cent, which means, not earlier than 2009," he said in an interview to sources.

Government had set targets in the Fiscal Responsibility and Budget Management Act in 2004 to reduce revenue deficit by 0.5 per cent and fiscal deficit by 0.3 per cent of GDP annually so that revenue deficit is wiped out and fiscal deficit is brought down to three per cent by 2009.

Ahead of the RBI's credit policy on April 18, Chidambaram also said he did not expect the interest rates to rise and that the Central Bank would take steps to inject more liquidity to ease the situation.

"I don't think interest rates should rise. We should expect an easing of liquidity situation," he said.

Asked about the booming stock market with BSE Sensex hitting the 11,000 mark, the Finance Minister said market regulator SEBI was a "competent watchdog and I think it keeps a close eye on what is happening."

The BSE Sensex fell by 157 points today after rising by 863 points in one month to touch 11,746. It had increased by 77 per cent in one year.