The International Monetary Fund, which has raised the gross domestic product growth projection of India to 7.6 per cent for the fiscal year 2003-04, said that drastic reforms were needed to push the country's growth rate to the desired 8-10 per cent annually.

IMF Chief Economist Raghuram Rajan has said that while the Indian government has as strong reason to feel good about the economy, a lot still remains to be done.

He said that for India to really 'shine', more aggressive infrastructure sector and public investment needs to be made. He said that unfortunately this was not happening because of the country's high fiscal deficit.

Rajan said that the there was an urgent need for India to control its burgeoning fiscal deficit as it could stunt growth in the coming years.

For India to sustain its high growth rate over the next two decades, Rajan said India needed to speed up its reforms, especially by improving its investment climate, having strong bankruptcy laws, having better corporate governance, and initialising wide-ranging labour reforms.

He also advocated that agriculture income should be into tax net, FDI norms must be relaxed further in most industry sectors, divestment of state-owned firms should be speeded up and full capital account convertibility must be ushered in soon.

He cautioned that the economy may grow at a slower rate next year, if the monsoons play truant.

He, however, admitted that there is good reason for India to be optimistic about future growth as there been an increase in productivity, an escalation in the young work force, a rise in the savings rate. All that is now needed for India is major structural changes to address the rising fiscal deficit and boost growth.

Additional inputs: PTI