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States to seek higher debt swap

New Delhi, Sept. 10 (PTI): States are likely to ask the Centre for more relief while retiring high-cost debts in exchange of low cost instruments, as against the Rs 25,000-crore debt swap proposed by finance minister Jaswant Singh last week.

“The state finance ministers will meet again this week to finalise the modalities,” West Bengal finance minister Asim Dasgupta said. Indications are that states may ask for a higher debt swap or reduction in the interest rate on the low cost papers to be issued to states in exchange of high cost debts.

Although the Centre decided to provide a relief of Rs 1,000 crore to states on interest burden, Dasgupta said states felt that the Centre should “improve upon it” as the reduction in interest burden was not adequate.

The issue assumed importance as outstanding debt of states increased to 23.93 per cent of GDP or Rs 5,80,000 crore last fiscal from 23.02 per cent in 2000-01 and 21.36 per cent in 1999-2000. Bengal, Orissa, Kerala, Rajasthan and Andhra Pradesh spent more than 70 per cent of revenue on payment of salary, interest and pension till 2001-02.

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