The council will meet again in November before which the members will meet and prepare a statement of recommendations for the consideration of the prime minister.

Talking to newspersons after the meeting, I G Patel, a member of the council, said the main task of the council is to help evolve a greater degree of consensus on economic policy. He also felt that the economy was not in a bad shape as it was made out to be. The management of the external sector of the economy has been very good, he said.

Speaking at the meeting, Vajpayee said there is a need to rein the fiscal deficit which appears unacceptablyhigh which requires reduction in government expenditure, greater revenue buoyancy and improvement in tax-GDP ratio.

The prime minister, however, struck a positive note saying the recent data showed Indian economy would achieve a 6.3 per cent growth this year as against 5.1 per cent in the previous year.

But there was a lot that needed to be done, and "we face a host of problems in infrastructure, in exports, fiscal areas, in re-deregulation of public enterprises and in reducing price rise," he told the council and sought its help in articulating policies to effectively deal with these immediate concerns.

The council which he heads, was attended by I G Patel, P N Dhar, Ashok Desai, Montek Singh Ahluwalia, Arjun Sengupta and G V Ramakrishna.

Giving prescription for tackling the problem of high fiscal deficit, Vajpayee said efficacy of public expenditure needed to be improved through sensible expenditure management policy. He said direct tax net should be widened besides eliminating exemptions andplugging leakages.

Noting that losses in public enterprises were a fiscal drain which were not affordable, Vajpayee said public sector restructuring should be undertaken with a credible disinvestment programme.

A programme for not merely garnering resources for government but to improve productivity and efficiency of the public enterprises was required, he said.

Touching upon the international economic scenario particularly the East Asian meltdown, Vajpayee said the country's financial sector should be further strengthened and made more resilient to shocks.

"This is not unconnected with efforts to avoid what is now described as the contagion effect," he said, adding that the Asian crisis began by severe weaknesses and over extension of the financial and banking system.

"We must take immediate measures for further strengthening the financial sector" by improving the quality of portfolios, reducing the problem of non-performing assets and ensuring that infrastructure receives adequate finance, hesaid.