WASHINGTON, Aug 30: The Indian economy is set to grow 5.5 per cent in the fiscal year to March 31, 2003, the IMF forecast on Thursday, but the country’s debt load risks running out of control.

The economy is projected to grow at 5.5 per cent in 2002-03, assuming a modest recovery in the industrial sector, the International Monetary Fund said after an annual review of India’s performance.

The Indian economy grew 5.4 percent in the past fiscal year, reflecting both weak agricultural growth and a significant slowdown in the service sector, it said.

But the government must meet a target of eight percent growth to lift people out of poverty, the Fund’s directors said in a statement.

Attainment of the authorities’ eight percent economic growth objective, which is the key to sustained poverty reduction, will depend critically on the pace of progress with fiscal consolidation and structural reform, they said.

IMF directors said they were worried about the sustainability of India’s fiscal situation.—AFP