MEDIUM
TERM LOANS TO FIVE STATES
The Ministry of Finance
has decided to fund the opening deficit of five States through
a medium term loan. A total assistance of Rs. 3154 crores is being
given to the States of Assam (Rs.750 crore), Manipur (Rs.371 crores),
West Bengal (Rs. 878 crores), Rajasthan (Rs.463 crores) and Orissa
(Rs.672 crores).
This decision
has been taken to ameliorate the ways and means position of these
States which have been facing a serious problem of over drafts.
In States such as Assam and Manipur, the State treasuries have
remain closed for almost 60 days at a stretch leading to a serious
erosion of credibility of the State Government as well as fuelling
the already unstable law and order problem.
The assistance
would be for a period of five years. They will be moratorium on
principle repayment till the submission of Twelfth Finance Commission’s
recommendations. The coupon on these loans will be the same as
the Reserve Bank of India’s ways and means assistance to the States.
