Financial Daily from THE HINDU group of publications
Tuesday, Feb 12, 2002
Financial Daily from THE HINDU group of publications Tuesday, Feb 12, 2002 |
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Opinion
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Letters Worthy swap deal
The scheme reportedly submitted to the Government by the Indian Merchant Chamber to reduce interest and capital burden on domestic debt appears to be attractive. By offering the equities of PSUs, the Government can avoid the commitments on the balances in NSCs, PPF and similar investments by public and institutions. As there is inherent risk due to the volatility of the shares due to market fluctuations, it is recommended that the offer may be made at the average price throughout the year, thus ensuring a discount. Moreover, such shares have more liquidity than NSCs or PPF, which carry a maturity period. As the scheme can further boost the stock market, it merits consideration. The reports that the annual interest burden on domestic debt has shot up to nearly Rs 1.1 lakh crore warrants some drastic action as the figure amounts to nearly half of the revenue, and the Government may not be able to sustain the interest payments. C. P. Velayudhan Nair
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