IMF said today Tsunami disaster would not impact 6-6.5% growth projections for India this fiscal, but the country's high fiscal deficit was a cause for concern."6-6.5% growth in this fiscal is a reasonable projection. Going forward things will go well," IMF chief economist Raghuram Rajan said, stressing the need for more radical reforms, particularly in the labour sector like introduction of 'hire and fire' system.Asked if Tsunami would impact the growth prospects, he said, "We will stick to the earlier 6-6.5% growth projections for India." Though a number of people were affected in coastal India, the economy would bounce back, he added.India should take advantage of the growth and undertake reforms; it should improve infrastructure and make labour market more flexible, Rajan said.He also stressed on agricultural growth and said that despite deficient monsoon, Indian economy has shown resilience and is poised for high growth.Rajan said that India cannot become a financial hub unless it has full capital account convertibility (CAC)."Full CAC cannot happen before the country reduces its fiscal deficit significantly and also releases public sector banks from having to finance the government debt." Referring to the FRBM Act, he said that once the revenue deficit is wiped out and fiscal deficit becomes manageable the country can target implementing full CAC from 2009.
