FinMin, RBI work out fiscal breather for State govts

The issue of outstanding guarantees of State governments — which have shot up to Rs 1,69,562 crore in 2001 from Rs 40,317 crore in 1992 — was also discussed at length at the meeting.

Sources said that these measures have been taken at a time when the deterioration in State finances has resulted in some States facing temporary cash imbalances.

The closing balance (of States) as on end-March 2002, at a negative Rs 7,872.82 crore, shows a sharp deterioration as compared to the closing balance, at a negative Rs 3,490.87 crore, as on end-March 2001.

Sources said that the MoF and RBI have taken a decision to increase the additional OMB limits for the retirement of expensive debts taken by various states from the Centre. However, sources said that the volume of additional OMB was not known, but that this would be announced in due course of time.

Of the total outstanding central loans and advances at Rs 2,47,030 crore as on end-March 2002, the outstanding block – and small savings loans – stood at Rs 2,19,415 crore, or at 89 per cent (of outstanding central loans and advances). Of these, loans that carry an interest of 13 per cent or above, amounts to Rs 1,14,324 crore. This comprises Rs 84,659 crore by way of small-savings loans.