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Debt containment and cost reduction important for states: Jalan
Mumbai, Aug 03: Expressing concern at the high fiscal deficit at central and state levels, Reserve Bank of India governor Bimal Jalan said today `containment of debt is as important as reduction in the cost of debt`.
Mumbai, Aug 03: Expressing concern at the high fiscal deficit at central and state levels, Reserve Bank of India governor Bimal Jalan said today "containment of debt is as important as reduction in the cost of debt".
Addressing a two-day meeting of state finance secretaries here, Jalan urged states to pay serious attention to debt servicing of state guaranteed bond, whether they be for Statutory Liquidity Ratio (SLR) or non-SLR bonds or instruments issued by public sector undertakings.
"When states directly approach markets for funds, there was zero tolerance to defaults", he said, adding, "it is our collective responsibility to find a solution for the issue of servicing of debt".
RBI Governor said in a release here today that states and the Centre have in the past couple of years been able to raise money at interest rates which are historically low. He, however, cautioned that the ability to raise funds at a lower cost should not bring in complacency because debt once incurred must be repaid.
Referring to the two tranches of debt swap conducted for states recently, Jalan said that the government and RBI would take a quarterly view of market conditions and put through further such auctions.
RBI deputy governor Rakesh Mohan, who chaired the meeting, acknowledged the necessity of expenditure containment and stressed the importance of raising tax revenues to reduce revenue and fiscal deficits.
He also emphasised upon the importance of toning up the tax collection machinery to raise the tax-gross domestic product ratio.
Bureau Report
"When states directly approach markets for funds, there was zero tolerance to defaults", he said, adding, "it is our collective responsibility to find a solution for the issue of servicing of debt".
RBI Governor said in a release here today that states and the Centre have in the past couple of years been able to raise money at interest rates which are historically low. He, however, cautioned that the ability to raise funds at a lower cost should not bring in complacency because debt once incurred must be repaid.
Referring to the two tranches of debt swap conducted for states recently, Jalan said that the government and RBI would take a quarterly view of market conditions and put through further such auctions.
RBI deputy governor Rakesh Mohan, who chaired the meeting, acknowledged the necessity of expenditure containment and stressed the importance of raising tax revenues to reduce revenue and fiscal deficits.
He also emphasised upon the importance of toning up the tax collection machinery to raise the tax-gross domestic product ratio.
Bureau Report