Terming the high fiscal deficit as the "biggest worry", Prime Minister Atal Bihari Vajpayee on Saturday warned that "danger lights are flashing" because of the slow pace of reforms, particularly in the power sector.

Inaugurating the National Development Council meeting to approve the Tenth Plan, which envisages an eight per cent annual growth during 2002-07, Vajpayee said to ensure fiscal consolidation, both at the Centre and in states, "we need to enhance revenues and address the problem of untargeted, runaway subsidies".

The finance ministry is preparing a paper on reform of subsidies, he said, adding "we should put in place a firm roadmap for applying correctives in a time-bound manner" to ensure that they reach the poor and are not "siphoned off" by others.

Though the country is poised to grow only at 5.5 per cent this year, Vajpayee said there is no need to be sceptical about 8 per cent growth in the Tenth Plan, as the economy is resilient.

Noting that trends of revival and growth are visible in many sectors, Vajpayee said, "If we remove the many constraints and hurdles in agriculture, industry and services, India's economy would attain a higher growth rate.

There is a need to undertake thoroughgoing reforms and remove bottlenecks in energy, transport and water infrastructure, he said.

For this purpose, an action plan has been prepared for reengineering all regulatory requirements at the central, state or municipal levels involved in the execution of investment projects.

Seeking cooperation of the state governments in its implementation, he said this is necessary to ensure that the present inefficiencies and harassment at the business-government interface disappear.

Mooting a four-point agenda, Vajpayee emphasised on governance reforms with special reference to e-governance, removal of barriers to internal trade, creation of investor friendly climate and financial and administrative empowerment of panchayati raj institutions.

Concerned by the water shortage faced by states, he said political parties have arrived at a consensus on the concept of inter-connectivity of all major rivers in the country for which a task force has been set up to prepare a blueprint.

He said economic reforms and development planning have no meaning if the living standards of the poor do not improve.