NEW DELHI: Chief Ministers began a crucial meeting with Prime Minister Atal Bihari Vajpayee to evolve a consensus on the contentious issue of freezing dearness allowance of government employees and strategies to bring the burgeoning debt of states to sustainable levels.
The close-door conference began amidst speculation of differences on these issues among states with some favouring and others opposing the unpopular decision of freezing dearness alowance as a measure to bring stability to the precarious state finances.
Apart from strategies for bringing debt to sustainable levels, the major issues that are likely to be thrashed out at the one-day conference included the debt swap scheme proposed during the Finance Ministers conference.
Under the scheme, the states will retire high cost debt of Rs 25,000 crore which would be replaced by low cost borrowing from the market. The high cost debt mostly from the small savings instruments was putting a huge burden on sates as the interest rates were as high as 14 per cent.
The other issues included measures to improve revenue collections of states and debt-GSDP ratio and bringing down rate of interest for many negotiated loans like those from LIC, GIC and NABARD.
Routing of funds for centrally sponsored schemes and improvement in ways and means advance scheme of RBI are some of the other issues that would be discussed threadbare at the conference which is being attanded by Finance MInister Jawant Singh and Deputy Chairman of Planning Commission K.C. Pant.