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Our Bureau

New Delhi , July 23

THE Rakesh Mohan Committee, constituted by the Government in January this year to advise on administered interest rates and rationalisation of saving instruments offered by the Government, has recommended continuance of the average yields on Government securities as the suitable benchmark, but for a longer period to impart more stability.

The Committee report, submitted last month to the Finance Minister, Mr P. Chidambaram, has also recommended that the weighted average of the yields on Government securities for the preceding two years should be taken for fixing the benchmark with a weight of 0.67 for the previous year and 0.33 for the year before that.

The Committee has also recommended continuance of the liquidity spread of up to 50 basis points and that the inter-year variation of interest rates may be limited to a maximum of 100 basis points on either side.

The Committee has also recommended the discontinuation of some schemes, an official statement here said.

Mr Chidambaram has already announced in his Budget speech the retention of the existing rates of interest on small savings instruments. Besides, the Government has also notified the discontinuation of fresh deposits in the 6.5 per cent saving bonds (non-taxable) and the two deposit schemes for retiring Government employees and employees of public sector companies.

The Committee report is available on the Finance Ministry website (www.finmin.nic.in)

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