CM seeks lower interest rates

NEW DELHI, SEPT. 1. Kerala today asked the Centre to review the financing pattern of Central assistance, saying the interest rates for project-linked assistance should be brought down. ``It is time to have a re-look at the financing pattern of Central assistance. The interest rates for project- linked assistance like Rural Infrastructure Development Fund (RIDF) may be brought down to 9 per cent,'' Mr. A. K. Antony told the National Development Council (NDC), chaired by the Prime Minister, Mr. Atal Behari Vajpayee, here.

The grant and loan portion should be equal with the loan portion carrying a reduced interest of 9 per cent, he said, citing that loans taken to finance the Plan from institutions such as the LIC, GIC and Hudco, now carried a high interest rate. So, the interest rate should be less in such cases, Mr. Antony said. He said a relationship had to be forged between the local Governments and banks to ensure direct credit for development projects taken up by States.

Pointing out that there were sections of people willing to borrow and repay at affordable interest rates, he said the subsidised interest rates could be objected to only if there was distortion through cross-subsidisation. ``If need arises, subsidies could flow from the programme departments concerned, but these cannot be removed altogether,'' he said, highlighting the housing for weaker sections of society.

At present, Centrally-sponsored schemes had been launched indirectly by `encroaching' upon Additional Central Assistance (ACA), a good portion of which was costly to the State, Mr. Antony said.

Stating that the ACA for basic minimum services had now been converted into `de facto' Centrally-sponsored schemes under the Prime Minister's Rozgar Yojana, for which sanctions had to be obtained from Central Ministries even on rural housing and roads, he asked, ``was it not odd when the Constitution itself had assigned these responsibilities to local Governments?''

Reserving Statutory Liquidity Ratio (SLR) borrowing to provide counterpart funding to externally-aided projects and to allot the remaining based on projects, affected the freedom of use and would be a great blow to the fiscal autonomy of the States.

``It will tie-up SLR funds and bring it under Central control, which cannot be exercised properly or efficiently,'' he said, agreeing that SLR funds should go to finance only planned capital expenditure.

On the privatisation issue, Mr. Antony said his Government had a difference of opinion on privatising all ``non- strategic public enterprises.'' He, however, said there was indeed no need to expand them by wasting precious funds.

- PTI.

Send this article to Friends by E-Mail

Section  : Southern States
Previous : Radio taxi fares revised in City
Next     : BJP invited to meet Hurriyat leaders