New Delhi: Standard and Poor's (S&P), the international credit rating company, yesterday praised the country's overall economic growth and external sector performance while expressing concern over the finances of the Centre and State Governments.

Mr Paul A Couglin Managing Director, S&P spoke to the press after a meeting with senior Finance Ministry officials that in "terms of growth and external sector, it is clearly a very positive story."

This was more so in the context of the economy registering a 10.4 per cent growth in the third quarter of 2003-04 and the official foreign exchange reserves crossing the $110-billion mark.

He however, added that the story was not so positive on the fiscal front. "We are most concerned about the size of the fiscal deficit, both at the Central and State Government levels, and also the loss-making electricity sector."

Mr Coughlin stressed that the key to sustain the current growth momentum was "fiscal consolidation". The combined fiscal deficit of the Centre and States currently exceeds 10 per cent of the country's GDP.