Addressing the Conference of the Finance Secretaries of states, Dr. Bimal Jalan, Governor, Reserve Bank of India said, "Given India's potential and strength to grow, it is our collective responsibility to put our systems in a way that the full potential could be realised." In this context, he emphasised the coordinated efforts of the Centre, the States and the Reserve Bank of India in improving the systems which is also reflected in the tremendous confidence shown by the world in India's immense potential to grow. The conference of Finance Secretaries of States was held today in the Reserve Bank of India, Mumbai. The conference is held twice a year and has assumed significance as a forum for the State Finance Secretaries for constructive exchange of ideas. Planning Commission and Ministry of Finance also regularly participate in the conference.

Sharing his thoughts on the international and domestic developments on the macro-economic front in the recent past, the Governor pointed out that in the aftermath of the Asian Crisis, the strength of the banking system and fiscal deficit have emerged as the most significant focal points in any economy and are constantly watched by observers. In a globalised environment, the developments in international markets have increasing impact on domestic markets, he stated. The Governor pointed out that fiscal deficit is no longer an issue having a bearing on domestic inflation alone but also has impact on the interest rates. In other words, fiscal deficit affects the financial markets and, therefore, gets closely watched by market participants the world over.

In the Indian context, therefore, it is the collective responsibility of the centre and the states to make serious efforts to contain fiscal deficit. He noted that the centre and the states have, in the recent past, been considering steps towards containing fiscal deficit. The Governor stressed that in the efforts to adhere to international standards, transparency would be of great significance. "Transparency will help better understanding of our systems by international observers," he contended. Against this backdrop, the Governor also stressed on collective responsibility in tackling issues, such as, reducing consumption expenditure or reducing demands on Government for non-productive, non-plan expenditure. Dr. Jalan emphasised that obtaining adequate returns on assets created out of government funds should be considered as a key component of any effort to reduce fiscal deficit.

The subsequent technical sessions concluded the following:

1. Constitution of a group on analysis of interest burden on states;
2. Setting up of an informal technical group to update the system of ways and means advances for states broadly as per the Vithal Committee recommendations with a mandate to finalise the report by end December 2000;
3. Familiarising the states with the operation of primary dealers system for market borrowings;
4. Arrangements for monitoring the guarantees given by states including letters of comfort.
5. Arrangements for greater interaction between the credit rating agencies and the state governments.