Financial Daily from THE HINDU group of publications
Monday, Jan 26, 2004
Financial Daily from THE HINDU group of publications Monday, Jan 26, 2004 |
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Money & Banking
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RBI & Other Central Banks Industry & Economy - Infrastructure RBI sets up panels to examine States' infrastructure projects Our Bureau
Mumbai , Jan. 25 THE Reserve Bank of India has decided to set up two working groups to examine the issues relating to credit enhancement in infrastructure projects in the States and to examine issues relating to uniform application software for treasury operations. The groups would have representations from the Central Government, Andhra Pradesh, Assam, Rajasthan, Public Infrastructure Development Board, Punjab, Uttaranchal, Meghalaya, Karnataka, Chattisgarh and Maharashtra, said an RBI press release. The decision to set up these working groups was taken at a two-day conference of State finance secretaries organised by the RBI. Addressing the conference, Dr Y.V. Reddy, Governor, RBI, urged States to adopt the model Fiscal Responsibility Bill, both in letter and spirit. "There are no short-term gains and it would not serve much purpose if the Bill is adopted in letter but not in spirit", said Dr Reddy, referring to the report on pension reforms presented by a group of finance secretaries. The RBI chief acknowledged that the problem of future liabilities of pension was huge and not one that can be resolved overnight. He suggested that the finance secretaries should first aim at creating appropriate institutional structure so that the problem can be handled smoothly in the medium term.Speaking at the same conference, Dr Rakesh Mohan, Deputy Governor, RBI, reiterated the need to avoid defaults on State-guaranteed bonds. In the context of restructuring of loans of State Governments, he said, that rescheduling or renegotiation in the SLR (statutory liquidity ratio) bond would undermine the sovereign status of these bonds. On the issue of bonds issued by State Financial Corporations (SFCs), it was suggested that States could consider swapping the high-cost debt of SFCs if they so wished, he said.
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