Strongly defending the stimulus in the Budget, Government said on Tuesday there would be "remarkable" improvement in fiscal deficit in 2003-04.

"We should end the next financial year (2003-04) with deficit (fiscal) showing remarkable improvement. I hope that economy will be rewarded," Ashok Lahiri, the chief economic advisor to finance ministry, said in New Delhi.

Addressing a seminar on 'Union Budget', organised by the Institute of Chartered Financial Analysts of India, he said though the Budget had estimated the fiscal deficit to be 5.6 per cent of gross domestic product, "there is no optimism built in." He said not much growth had been assumed on the tax-GDP ratio.

The Union Budget for 2003-04 would give enough stimulus for the growth of economy, especially in the infrastructure, which had the potential to generate demand for steel and cement, apart from providing employment and scope for diversification in agriculture.

He said this was one of the reasons why the Government had brought in the concept of "viability gap funding" so that more private investment could be attracted.

"If infrastructure takes off, then the potential for direct employment could be enormous," he said, adding that the multiplier effect on infrastructure was high that it could generate more growth for the economy as a whole.

Differing from the Central Statistical Organisation's projected 4.4 per cent growth for this fiscal, Lahiri struck a philosophical note saying, "growth could be slightly higher, but only the time will tell."

Lahiri said inflation on an average basis was less than three per cent this year, while on point-to-point basis, it once went over high per cent, but "it (inflation) demonstrated the resiliency of the Indian economy."

The pressure on the price front was mainly due to edible oil and fuels, he said, referring to international disturbances, causing the oil prices to gyrate violently.

Citing the high foreign exchange reserves of over $75 billion, he said it was 125 per cent of the currency liabilities of Reserve Bank of India.

On the imports, Lahiri sounded impressive as he said the rise was mainly on account of capital good and raw materials, which could be valued additions in the economy.

Citing an international report that India would be among China and South Korea as the propellants of growth in Asia, he said the country had to take pride in that observation.