The government on Friday warned that fiscal deficit was hindering growth despite strong economic situation prevailing now with high forex reserves, surplus food-grains and low inflation, while asking regulators to plug the loopholes to make the markets safe.

"The biggest danger is the fiscal deficit, especially of some states. If we take care of this worry, India can attain a much higher growth," finance secretary S Narayan said at the Sebi investor awareness campaign in New Delhi.

Centre's fiscal deficit is pegged at 5.3 per cent of GDP for this fiscal. The combined fiscal deficits of the Centre and states were a little over 10 per cent of GDP last fiscal.   Otherwise, Narayan said, India's economic fundamentals was the strongest as never before.

"We never had such high forex reserves ($70 billion), surplus foodgrains, sugar stocks, low interest rates and inflation rate," he said, adding, "we are now grappling with the problems of surpluses."

That is the opportunity India has, he said urging the investor community to come forward with renewed confidence into the market.

In this context, Narayan said the Joint Parliamentary Committee that probed the stock market scam of 2000-01, had indicated flaws, shortcomings and weaknesses in the regulatory systems and it was time for the regulators to act.