(a) whether various State Government have been ignoring the warning of the Reserve
Bank of India to put a cap on guarantee offering consequent to which billions of rupees
guarantee standing have increased from March,1992 to September, 1999;
(b) if so, the measures Union Government propose to take to direct the State Government
from giving further guarantees and to recover the amount from them; and
(c) the amount of guarantee outstanding/issued by State Government, State-wise as on date?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL):
(a) It was stated in the Report of the Technical Committee on State Government Guarantees
that in the interest of the ensuring fiscal sustainability as well as more selectivity in
the matter of taking and giving of guarantees, it would be desirable for the States to fix
a ceiling on guarantees. As per information available, the sate governments which have
imposed the statutory ceilings on guarantees are Gujarat, Karnataka, Sikkim and West Bengal.
Rajasthan and Assam have imposed administrative ceilings. Tamil Nadu has taken the decision
to charge a guarantee commission on outstanding guaranteed amount.
(b) Ministry of Finance has issued communication to the Finance Secretaries of ail
States that for borrowings through Special Purpose Vehicles (SPVs) which are
guaranteed by the State Governments and clearly have to be serviced by the State, prior
permission under Article 293(3) should be necessary. The SPV borrowings which enters the
Public Account of the State Budget and is further on-lent to Consolidated Fund of State
will not, in the ordinary course be allowed.
(c) State-wise amount of guarantees outstanding for 17 major states are given in
the Statement.