Terming the fiscal deficit situation as "unsustainable" and as a brake on growth prospects, International Finance Corporation said on Thursday that India's regulatory framework was slow and bureaucratic, leading to widespread corruption and impeding foreign investment flows.

"The high fiscal deficits remain an invisible deadweight on the private sector, crowding out public investment in infrastructure as tax revenue is swallowed up by debt payments and power subsidies," IFC vice president (operations), Assaad J Jabre, said at a Confederation of Indian Industry conference in New Delhi.

Despite the high liquidity, historically low interest rates and inflation, he said, "India's combined fiscal deficit, at over 10 per cent of GDP, is clearly unsustainable. I think the fiscal deficit should come down significantly."

"The 5-6 per cent GDP growth attained by India is good but not enough to eliminate poverty quickly," he asserted, adding India has the capability to bring down poverty unlike other emerging countries.

Pointing to the problems of "over-regulations", Jabre said, "India's regulatory framework is still too slow and leads to too much corruption."