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State gets a ‘pat’ from RBI Governor

Special Correspondent

Subbarao has appreciated the efforts to ensure fiscal discipline: Yeddyurappa

— Photo: K. Gopinathan

Bonhomie: Chief Minister B.S. Yeddyurappa and Home Minister V.S. Acharya with RBI Governor D. Subbarao at a meeting at the Vidhana Soudha in Bangalore on Thursday.

BANGALORE: Chief Minister B.S. Yeddyurappa has claimed that prudent financial management and fiscal discipline in the State has come in for praise from Governor of Reserve Bank of India (RBI) D. Subbarao.

Speaking to presspersons after a meeting with the RBI Governor at Vidhana Soudha on Thursday, Mr. Yeddyurappa said Dr. Subbarao had not only appreciated the efforts made by his Government to ensure fiscal discipline, but also responded positively to the financial needs of the State.

When Mr. Yeddyurappa’s reaction was sought on the allegations of financial mismanagement levelled by the Opposition, the Chief Minister said the Government would place before the public a “factual report” of governance when the BJP Government completed one year in office later this month.

“When the RBI Governor himself has appreciated the financial management in the State, I don’t have to bother about what they (Opposition parties) have to say”, he said.

Extending educational loan at an interest rate of 6 per cent by banks figured prominently in the talks with the RBI Governor. “We had an elaborate discussion on the matter. The banks may need prompting from the RBI to expand the implementation of the scheme that had been introduced by the State Government”, Mr. Yeddyurappa said before he took exception to the conditions laid out by the banks for extending educational loans.

With the credit deposit ratio in the State coming down to 5 per cent in the past two years, Mr. Yeddyurappa said advances to the agricultural sector and weaker sections out of the total advances had also seen a decline of 1 to 2 per cent. He hoped the RBI would help increase the quantum of farm loan to farmers.

During the meeting, Mr. Yeddyurappa said he had brought to the notice of the RBI Governor the initiatives taken by the State Government to give a boost to the agricultural sector. The interest subsidy linked repayment had been announced by the Government to facilitate farm loans at 3 per cent interest. The Government was working with State Level Bankers Committee (SLBC) to work out the modalities.

In this backdrop, Mr. Yeddyurappa told Dr. Subbarao that the RBI could help the State by stepping up credit flow to the agricultural sector by allowing higher refinance by NABARD to State cooperative credit institutions from the current 40 per cent to 50 per cent.

Despite the RBI’s efforts to moderate interest rates in the context of economic slowdown, Mr. Yeddyurappa said the interest rates for micro and small industries were still very high at 13 per cent. “It should be brought down to less than 10 per cent”, he said.

He said the RBI Governor had promised to look into the State Government’s concerns.

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