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RBI advances to States raised

New Delhi, May 23: The ceiling on ways and means advances to the States from the Reserve Bank of India had been increased by four times from this month to enable them to meet their temporary difficulties, the Finance Minister, Mr. Y.B. Chavan, told the Rajya Sabha to-day. He also told the House that the Centre would hold discussions with Rajasthan, Mysore, Andhra Pradesh and Assam this month and the next on the financial problems and difficulties faced by them, particularly in the wake of stoppage of overdraft facilities. Mr. M.K. Mohta asked whether even with raising the limit by four times, the economically weaker States like Rajasthan would be able to deal with the budgetary gaps. He wanted to know whether the Government would make a study of the problems of the weaker States. The Finance Minister said the idea of overdrafts was to meet any temporary imbalance in the flow of receipts and expenditure. But later there was an increasing tendency on the part of the State Governments to draw on this facility which became some sort of deficit financing.  Mr. Chavan said: This sort of deficit financing to the tune of Rs. 600 crores which has become the States’ main source of meeting their budgetary expenditure will completely ruin the economy of the country.”


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