Y V Reddy: The Reserve Bank and the State Governments - partners in
progress
Address by Dr Y V Reddy, Governor of the Reserve Bank of India, at the Madras School of
Economics, Chennai, 23 September 2007.
* * *
Respected Dr. Rangarajan, Dr. Raja Chelliah, Dr. Srivastava, Professor Kumar and friends,
I am thankful to Dr. Srivastava for affording me the opportunity to participate in the annual
day celebrations of the Madras School of Economics. It is an honour and privilege to be
associated with the activities in a distinguished gathering such as this one.
I was born in a village in Kadapa (then Cuddapah) district but went to High School in
Chennai (then Madras), studying in Telugu medium. After a two-year stint in Government
Arts College, Anantapur, I was back in Chennai for pursuing my university level studies in
economics. My participation today in the annual day celebrations of the Madras School of
Economics gives me an opportunity to express my gratitude to (Madras) Chennai which
helped me in becoming and being a student of economics.
There are several reasons for selecting this subject for my address today. First, in the Indian
federal polity, the States, relative to the Centre, have taken the centre-stage in the reform
process since the areas of highest national priority now fall essentially within the purview of
the States. For instance, agriculture, education, public health, sanitation and much of
physical infrastructure belong primarily to the domain of the State Governments. Second, Dr.
Rangarajan and Dr. Srivastava were Chairman and member, respectively, of the Twelfth
Finance Commission, which made historic contribution to the Centre-State relations. It is also
noteworthy that they addressed the Sixteenth Conference of State Finance Secretaries, held
at the RBI. Third, it was Dr. Rangarajan who, in 1997, initiated the process of active interface
between the Reserve Bank and the State Governments a decade ago, when he inaugurated,
as the Governor of the RBI, the first Conference of State Finance Secretaries. Finally, there
is very little literature available on the theory or practice of the role of the central banks at the
level of sub-national governments. Hence, there may be some merit in recording our
experience in this regard. I am taking this opportunity to chronicle the unique and productive
partnership between the RBI and the State Governments in securing the progress of our
economy, as part of economic reforms.
On November 8, 1997, Dr. Rangarajan, the then Governor of the RBI, in his inaugural
address at the First Conference of the State Finance Secretaries convened by RBI, had
flagged the issues that needed to be focussed upon in management of State finances. These
included: alternative methods for borrowing by the States, statutory ceiling on debt, setting
up of consolidated sinking fund and the issuance of State Government guarantees. I would
like to report that most of his expectations have since been substantively met, as I will
enumerate today, a little later.
I would also like to place on record the high priority that continued to be accorded to this
collaborative process by Dr. Jalan who succeeded Dr. Rangarajan as the Governor, RBI. For
instance, in his inaugural address at the Tenth Conference of State Finance Secretaries, on
June 7, 2002, stressing on the cooperative framework between the Centre and the States,
Dr. Jalan had pointed out that there were lessons to be learnt from the coordinated approach
adopted by some of the large federal governments in managing their finances successfully in
contrast to some of the Latin American nations. He had noted that although the Centre's
large deficit had constrained its ability to support the States, the harmonious relations
amongst the States, the Centre and the RBI, which are involved in the management of public
finances in India, had enhanced the stability and integrity of India's financial system. He had
also reiterated the problems associated with the "automatic debit mechanism", stating that a
State could not manage its finances if such a mechanism pre-empted a large portion of its
available funds.
Mutual trust
The "Reserve Bank of India" and "banking" find a listing in the Seventh Schedule of the
Indian Constitution and hence, fall within the exclusive jurisdiction of the Central
Government. The Reserve Bank of India Act, 1934 provides that the Central Government
shall entrust the RBI with all its money, remittance, exchange and banking transactions in
India and the management of its public debt, and shall also deposit all its cash balances with
the RBI, free of interest. On the other hand, the RBI may, by agreement with any State
Government, take over similar functions on behalf of that Government. Accordingly, the RBI
is the banker to both the Central Government and all the State Governments, except two, in
the Indian Federation.
The RBI also manages the open market borrowings of the Central Government and all the
States, with two exceptions. The market-borrowing programme of the State Governments is
finalised by the Government of India and the Planning Commission, keeping in view the
provisions of Article 293(3) of the Constitution of India. The Article stipulates that a State may
not, without the consent of the Government of India, raise any borrowings if it has any loan
outstanding, which is repayable to the Government of India.
The RBI has, over the years, closely interacted with the State Governments in its
developmental role - particularly in areas of development of agriculture, and small industries.
The RBI was specifically entrusted with an important promotional role, since its inception, of
financing agricultural operations and marketing of crops. In fact, the Agricultural Credit
Department was created simultaneously with the establishment of the RBI in 1935.
The Reserve Bank prepares and publishes an annual Study on the State Government
Finances. This is a unique study since it compiles, consolidates and analyses detailed data
on the budgets of all the State Governments. It also documents the policy initiatives on State
finances and debt management by the State Governments, the Government of India and the
Reserve Bank. The study has been well received by policy makers and academicians, both
in India and abroad, and is an important reference document.
It is noteworthy that the interface between the RBI and the State Governments arises not
only out of statutorily mandated obligations but also voluntarily, based on mutual trust. The
mechanism of bi-annual conference of the State Finance Secretaries has formalised and
strengthened the process of partnering for progress, based on mutual respect, through a
process of continuing consultations, but with the States retaining their freedom. Apart from
the State Finance Secretaries, senior functionaries of the Government of India, the
Comptroller and Auditor General of India, the Controller General of Accounts and the
Planning Commission as also heads of select departments of the Reserve Bank are invited
to the Conference. There are occasions when fiscal experts such as Mr. A. Premchand, Mr.
M.S. Ahluwalia from the Planning Commission, leading commercial bankers and
representatives of credit rating agencies are also invited to participate and contribute to the
specific issues on the agenda.
Open market borrowings
The normal procedure followed for open market borrowings, until the first half of the nineties,
was that the RBI would complete the combined borrowings of all States in one or two
tranches at a predetermined coupon, which was common to all States and was on par with
that of the Central Government. After announcement of the loan, the RBI would write to the
banks indicating the contribution expected from them, mainly based on their market-share of
deposits, with a request to invest in the State Government bonds. Thus, high statutory pre-
emptions in the form of Statutory Liquidity Ratio (SLR) in respect of the banks and the
tyingup of the loans by the RBI ensured a captive market for these loans amongst the banks and
the successful completion of the allocated borrowing programme.
With the substantial increase in the market borrowing programme of the Central
Government, progressive reduction in the SLR, increasing sophistication of the Indian debt
markets offering diversified portfolio choices to banks, mark-to-market valuation norms,
changes in risk weighted capital prescriptions and the deteriorating financial position of the
States, it was becoming increasingly difficult to complete the market borrowings of the
States, through the tranche system, at pre-announced coupon.
To reflect these new realities, including the market perception of the status of the State
Governments, in 1997, the coupon rate for the entire borrowing programme for all the States
was fixed broadly on the basis of a mark-up (which was initially 25 basis points and later
increased to 50 basis points) over the yield of ten-year stock of the Central Government.
Apart from the fact that the banks displayed an increasing reluctance to voluntarily invest in
the State Government paper, the market had started discriminating amongst the States
based on their perceived strengths and weaknesses; thus adversely affecting completion of
the approved borrowing programme for the States.
The Central Government had switched over to the auction method for its open market
borrowing programme since 1993 and in view of the experience described above, it was felt
necessary for the State Governments to explore the possibility of adopting a flexible
approach with regard to interest rate, maturity, etc., of their borrowings. It was also felt that in
view of inter-State disparities, a gradual and cautious approach was necessary. Based on
the consensus at the first Conference of the State Finance Secretaries, an option was made
available to the State Governments to enter the market through a flexible approach, on their
own, to the extent of 5 to 35 per cent of their gross market borrowings. The timing and
volume of issues for auction were to be decided by the RBI, in consultation with the State
Governments, taking into account the market and liquidity conditions. This dispensation
enabled the well-managed States to take advantage of the market conditions and raise loans
at finer rates while the smaller States were able to protect their interests by substituting a
part of their borrowings under the totally pre-announced coupon approach, with the auction
method. The State Governments were subsequently encouraged to progressively further
increase the share of market-borrowings under the auction route initially to 50 percent and
thereafter to cover the entire market-borrowings.
The auction system was experimental since the year 1998-99 with one State adopting the
auction route in January 1999. The number of States adopting the auction route increased
gradually in subsequent years.
With the implementation of the recommendations of the Twelfth Finance Commission (TFC),
the year 2005-06 marked a watershed in the evolution of the finances and the (open market)
debt management operations of the State Governments. Spurred by the moderation in fiscal
imbalances and progressive enactment of Fiscal Responsibility Legislation by the States -
induced in some measure by the incentivised Debt Relief Scheme recommended by the TFC
- the market perception regarding the fiscal position of the States seemed to have improved
considerably. As many as 24 States opted for the auction route during 2005-06 as compared
with only three States in the previous year. The States raised 48.5 per cent of their total
borrowings through the auction route during 2005-06. The cut-off yields in the auctions were,
in general, lower than the tap issues.
The market borrowings of the State Governments during 2006-07 and 2007-08 so far have
been raised entirely through the auction route, with a general decline in spreads. In brief, the
migration from the system of administered borrowing programme to the auction method of
borrowing in respect of the States was achieved gradually and through a consultative
process between the States and the RBI.
Consolidated Sinking Fund
At the request of the State Governments, the Reserve Bank had prepared a model
Consolidated Sinking Fund (CSF) Scheme and circulated it amongst them for adoption /
consideration in 1999. By the time of the ninth Conference of the State Finance Secretaries
held in November 2001, 11 States had set up the CSF, which is being administered by RBI.
The Twelfth Finance Commission had recommended that the CSF may cover repayments in
respect of all the loans of the State Governments (and not just open market borrowings).
Furthermore, the Bezbaruah Committee on Ways and Means Advances (WMA) to States
had recommended that the States would be entitled to the Special WMA to the extent of their
net incremental annual investment in the CSF, subject to the prescribed ceilings. Against this
backdrop, the Reserve Bank circulated a revised model scheme of CSF amongst the State
Governments in May 2006. As on June 30, 2007, of the eighteen State Governments that
had set up the CSF, 11 had established it as per the revised CSF scheme. Many more
States have intimated their intention to adopt the revised CSF scheme, as administered by
RBI.
Prepayment of debt
In the context of build up of cash balances, two States proposed to utilise their surplus cash
to pre-pay a part of their outstanding open market debt. In this connection, the modalities of
buyback auctions were finalised by the Reserve Bank in consultation with these State
Governments and the Government of India. General issues relating to the pre-payment of
debt were discussed at the 18th conference of the State Finance Secretaries, held in August
2006. The RBI has conducted two rounds of buyback auctions in February and March 2007.
State Government guarantees
Issues relating to State Government guarantees have also been discussed in almost every
conference of the State Finance Secretaries. Against the imperative of infrastructural
development, the States have been under pressure to provide guarantees for facilitating the
flow of funds to the high-priority sectors, State public sector enterprises, developmental
institutions and local bodies, for commercial as well as non-commercial activities as also for
urban development. The element of risk associated with such guarantees, transparency with
regard to the guarantee policies and the magnitude of guarantees extended by the State
Governments have raised concerns regarding the optimal or sustainable level of such
guarantees. It is well recognised that while the guarantees, being contingent liabilities, do not
form part of the debt, as conventionally measured, these have, in the eventuality of default,
the potential of straining an apparently sound fiscal system.
At the first Conference of the State Finance Secretaries held in November 1997, the issue of
government guarantees was deliberated upon at length and the view taken was that, in the
interest of prudent financial management and the credibility of the guarantees issued, there
was a need for a policy on guarantees for each State Government within certain national
parameters. Accordingly, a Technical Committee was constituted to examine the issue of
State Government guarantees, in all its aspects. The report of the Committee was discussed
at the third Conference of the State Finance Secretaries, held in January 1999, and pursuant
to the recommendations of the Committee, several States have since taken the initiative to
fix a ceiling on guarantees to be issued by them.
The devolvement probabilities of various guarantees are not identical and consequently, all
guarantees can not be treated uniformly in terms of their fiscal impact. In order, therefore, to
assess the fiscal risk arising out of guarantees in a more realistic and objective manner,
there was a need to evolve a methodology for classifying guarantees into appropriate
categories, with each category reflecting broadly similar fiscal impact. This, in turn, was
expected to facilitate the fixing of ceiling on guarantees in a non-mechanistic fashion to better
capture the risk inherent in guarantees, and to enable adoption of better provisioning
techniques to cover these contingent liabilities. In this backdrop, it was decided to constitute
a Group of State Finance Secretaries on the Fiscal Risk on State Government Guarantees to
examine the fiscal risk of guarantees extended by the State Governments. The report of the
Group was discussed at the tenth Conference of the State Finance Secretaries, held in June
2002.
The general consensus that emerged at the Conference was to place the Report of the
Group in the public domain. It was also agreed to explore the possibility of extending the
scope of the relative RBI circular addressed to the banks, to the financial institutions also so
that they too would undertake due diligence and proper appraisal in financing of projects
rather than merely relying on the State Government guarantees in their favour. It was also
proposed that States could be provided technical assistance in regard to assigning
appropriate risk weights to the guarantees.
The Reserve Bank organises workshops on the evaluation of fiscal risk of guarantees for the
benefit of State Government officials. Representatives of credit rating agencies are also
invited to give presentations at the workshops. So far, four such workshops have been
organised. It was also decided that the State Governments would be encouraged to seek, for
their internal use, credit ratings from a rating agency so that they could initiate appropriate
measures to improve their financial performance when they approached the market to
mobilise resources.
The Reserve Bank circulated a draft scheme on Guarantee Redemption Fund (GRF)
amongst the State Governments for voluntary adoption. As an incentive to build up the
Consolidated Sinking Fund (CSF) and GRF, the Bezbaruah Committee (2005) had
recommended that net incremental (i.e., new investment less redemption/liquidation) annual
investment of States in CSF/GRF would be made eligible for availing Special WMA, but up to
a ceiling equivalent to the Normal WMA limit. Keeping this in view, the Reserve Bank
circulated revised draft GRF scheme amongst the State Governments in May 2006. As on
June 30, 2007, eight State Governments had set up the GRF, of which three had put in place
the revised scheme.
Ways and Means Advances, and cash management
The Reserve Bank of India (RBI) has been extending Ways and Means Advances (WMA) to
State Governments since 1937 with the objective of covering temporary mismatches in the
cash flows of their receipts and payments.
The WMA Scheme has been periodically revised, right since the early 1950s, in the light of
the perceived requirements of the State Governments, keeping in view the evolving fiscal,
financial and institutional developments as well as the objectives of monetary and fiscal
management. State-wise limits in respect of Normal and Special WMA are determined based
on certain parameters and have been revised, periodically, over the years. An overdraft (OD)
occurs whenever these limits are exceeded. Maximum time-period (days) and/or financial
limits up to which the State Governments can remain in overdraft have been specified; these
limits have also been revised periodically. Payments on behalf of the State Governments are
suspended in case the OD limits are breached.
Till the late 1990s, the Normal and Special WMA limits of State Governments were fixed in
terms of specified multiples of their minimum balances kept with the RBI. Both the minimum
balances and the "multiples" to obtain the Normal WMA limits, were revised upwards a
number of times (though not necessarily at the same time) over the years.
There have been strong demands from several States, from time to time, for upward revision
of the WMA limits. RBI had taken the view that WMA is meant for meeting the temporary
mismatches in the cash flows and hence, any upward revision in the WMA limits to meet
structural deficits of the States is inappropriate. The matter remained a contentious issue for
some time.
The initiation of the Conference of State Finance Secretaries in 1997 induced a
transformation in the approach to formulating changes in the WMA Scheme. Distinct from the
past, Advisory Committees were periodically constituted by the Reserve Bank to review the
prevailing WMA arrangements and recommend changes, as considered appropriate, in the
light of the evolving circumstances. The involvement of experts from outside the Reserve
Bank in such Advisory Committees helped to strengthen and broad-base the modalities for
effecting appropriate changes in the WMA Scheme. In fact, three Advisory Committees, that
have been constituted so far, have been chaired by experts from outside the Reserve Bank
and have included other "external" experts apart from senior functionaries from the Reserve
Bank, as members.
The first informal Advisory Committee on the WMA to State Governments was constituted in
1998, under the chairmanship of Shri B.P.R. Vithal. As a major break from the past practices,
the Vithal Committee recommended the de-linking of the size of the Normal WMA limit with
the minimum balances held by the States on the grounds that "fixing the WMA limits as
multiples of an unchanged minimum balance, as in the past, does not capture the differing
needs of the States in line with the different growth in their budgetary transactions. This has
resulted in wide inter-State variations in the WMA limits in relation to the size of the Budget,
and this needs to be corrected." The Vithal Committee instead proposed linking the normal
WMA limit to the cash flows of the State. The recommendations were implemented in the
light of further consultations with the States and the Centre.
Subsequently, similar committees (Ramachandran Committee, 2003 and Bezbaruah
Committee, 2005) have refined and improved upon the WMA arrangements. It is noteworthy
that WMA arrangements have ceased to be a contentious matter amongst the Centre, States
and RBI on account of the reliance placed on the advice from the outside experts and
intensive consultations amongst the stakeholders, in finalising the arrangements.
The upsurge in the surplus cash balances of some of the State Governments since the
middle of 2004-05, in contrast to the liquidity pressures witnessed in the earlier period, has
posed newer challenges to financial and cash management of State Governments. The
issues relating to investment of cash balances of the States were discussed at the 18th
Conference of State Finance Secretaries held in August 2006 and also in the 20th
Conference of State Finance Secretaries held in August 2007. Taking note of the
discussions, the Reserve Bank is in the process of formulating the plans in this regard, in
consultation with the Centre and the States.
Advice on fiscal management
The importance of fiscal transparency has got reinforced in the recent years after
Government of India subscribed, in 1997, to the Special Data Dissemination Standards
(SDDS) promulgated by the International Monetary Fund. In the light of this development, it
was decided to constitute a Group of the State Finance Secretaries to suggest various
measures of disclosure, which could be introduced in the budgetary exercise of the State
Governments. It was also decided that the Group could lay down a model budget for the
States, which would enable the Legislature and the public to enhance their understanding of
the State finances. The Group suggested, inter alia, that it would also be useful if the State
Governments could publish a document akin to the Budget at a Glance of the Union Budget
furnishing the estimated levels of Gross Fiscal Defiit (GFD) and Primary Deficit (PD) of the
State, including their ratio to the State Development Product (SDP). The document could
also incorporate time-series data on important fiscal variables of the State. The levels of
outstanding debt, guarantees extended, wages and salaries, and subsidies could also be
explicitly indicated. Many States have, in the light of these deliberations, modified their
budget-related documents to enhance fiscal transparency.
A Group was constituted in February 2003 to undertake a study of the pension liabilities of
the State Governments and make suitable recommendations. The Group observed that if
pension payments of the States were to grow at the historical average growth rate, pension
payments alone would pre-empt about 20 per cent of the total revenue receipts of the States
and as much as 30 per cent of the revenue receipts in the year 2010-11. Thus, purely from
the perspective of fiscal sustainability of the States and the magnitude of the problem,
structural alteration in the existing pension scheme, appeared necessary. The Group
recommended introduction of contributory pension scheme/s for the new employees of the
State Governments in lieu of the existing non-contributory defined-benefit pension scheme.
The Group also recommended three alternative pension models, which are to be acted upon
by the States as they consider appropriate. As per the available information, 19 State
Governments have notified a defined-contribution pension scheme for their new employees.
Recognising the absence of unanimity about the exact level, composition, and methodology
for compiling the liabilities of the State Governments in India, it was decided in August 2004,
to constitute a working group to evolve a methodology. The Group recommended that the
compilation of data on the budgetary liabilities should be consistent with those in respect of
the Gross Fiscal Deficit and accordingly, specified the constituent items. The Group also
recommended exclusion of the implicit/contingent liabilities from the definition of budgetary
liabilities, reckoning the wide divergence in views on the various items that should be
included under implicit liabilities. It, however, recommended the disclosure of information on
various implicit liabilities along with the budgetary liabilities. The Group recommended
specific formats for timely release of data on the liabilities in the budget documents of the
State Governments. The Group also recommended that the Reserve Bank should compile
and publish the data on the liabilities of the States in its annual study on the State budgets;
this recommendation has already been implemented.
Fiscal responsibility legislation
The RBI had provided detailed and comprehensive technical inputs to the Government of
India for formulating a Fiscal Responsibility and Budget Management Law, which culminated
in the enactment of the Fiscal Responsibility and Budget Management (FRBM) Act by the
Parliament. In view of this successful outcome, State Finance Secretaries expressed a
desire for similar advice to them from the RBI. Accordingly, a group was constituted in
October 2003 with select State Finance Secretaries and a representative from the
Government of India, Ministry of Finance, as members, to prepare a model fiscal
responsibility legislation for the States. The draft Report of the Group was discussed at the
14th Conference of the State Finance Secretaries, held in August, 2004 and the final report
was submitted to the Reserve Bank in January 2005. The Group decided that the model
legislation would generally follow the pattern of the Central FRBM Act, and build upon the
State fiscal responsibility legislations already enacted. The Group also took into account the
international best practices available in the area as well as the recommendations of the
various committees on fiscal transparency and on the issues related to voluntary disclosure
of information by the State Governments. Various dimensions of the fiscal legislative
framework, such as, the choice of targets, the road map for achievement of the targets, need
for a detailed set of illustrative rules, independent evaluation criteria, prioritisation of capital
expenditure, treatment of contingent liabilities including guarantees, computation of pension
liabilities, etc., were deliberated upon to arrive at a consensus. The Group felt that the model
Bill would provide guidance to the States for enacting their fiscal responsibility legislations
with reference to certain benchmarks.
The objective of the Group was to design a template for the fiscal responsibility legislation for
the States on the basis of feasibility on pragmatic considerations and enforceability, taking
into account the diverse requirements of various States. It was considered desirable to allow
each State to take a view on the sequencing of adoption of various provisions of the model
Bill, fixing the actual targets, time frame for implementation thereof and allocating the
provisions between the Act and the Rules, depending on its fiscal capabilities and further
refining the provisions given in the model bill within the overall framework of fiscal prudence
and sustainability.
All State Governments, except two, have already enacted fiscal responsibility legislation.
New arrangements for borrowings by the States
According to the TFC, it would be appropriate for the States to take advantage of the
prevailing market rates and avoid the spread charged by the Centre on the assistance
provided by it. The pattern of Central assistance included loan as a major element in respect
of general category States, which was implicitly funded from borrowings by the Centre and
hence, the terms of loans extended to the States reflected the Centre's cost of borrowings.
To the extent these arrangements prevailed, there was, in effect, intermediation by the
Centre in the provision of loans to the States as part of the Central assistance. The TFC,
therefore, recommended that the Central Government should not act as an intermediary for
future lending and allow the States to approach the market directly. If some fiscally weak
States were unable to raise funds from the market, the Centre could borrow for the purpose
of on-lending to such States, but the interest rates should remain aligned to the marginal cost
of borrowing for the Centre. This approach was accepted by the Central Government, in
principle, to be implemented in phases, in consultation with the Reserve Bank.
The new arrangements for ensuring disintermediation of the Centre in respect of States'
borrowings were deliberated upon, at the Conferences of State Finance Secretaries and by
the Monitoring Group on Cash and Debt Management of the Government of India and RBI.
In the light of these discussions and in order to operationalise the new arrangements, the
Government of India constituted a Technical Group, with Smt. Shyamala Gopinath, Deputy
Governor, RBI as chairperson and the officials of the Government of India, select States and
the Reserve Bank, as its members. The Technical Group submitted its report to the
Government of India in December 2005 and made several recommendations.
In tune with the recommendations of the Group, there has been noticeable progress in
regard to drawing up of calendar of borrowings, re-issuance of securities and adoption of the
auction method for borrowing by the States. In addition, on the lines of the recommendations
of the Working Group on Liquidity of State Government Securities (Chairman - Shri.
V.K.Sharma), 2005, State Development Loans (SDLs) have been made eligible for repo
transactions under the liquidity adjustment facility of the RBI and it has been decided to
introduce the non-competitive bidding facility in respect of the primary auctions of SDLs. As
far as the arrangements for sharing the corpus of the National Small Savings Fund (NSSF)
are concerned, in accordance with the decision of the National Development Council, the
obligatory share of the States has been reduced to 80 per cent with effect from the year
2007-08.
Loan Council
The TFC had also recommended that ".....States, like the Centre, must decide their annual
borrowing programme within the framework of their respective fiscal responsibility
legislations.... The overall limit to their annual borrowings from all sources should be
supervised by an independent body like a Loan Council with representatives from the
Ministry of Finance, Planning Commission, Reserve Bank of India and the State
Governments. The Council may, at the beginning of each year, announce the annual
borrowing limits for each State, taking into account the sustainability considerations....."
(Para 15.7).
It was, however, felt that setting up of a new institution, like the Loan Council, would entail
additional cost in