Sanjeev Sanyal, principal economic advisor to the Union finance ministry, on Tuesday said the government is working on creating a “sovereign benchmark” for raising cheap debt from overseas markets.
“The government is working on a sovereign benchmark for external borrowing, which will be finalised by September this year,” he said while speaking at the 91st Annual General Meeting of the Indian Chamber of Commerce in Kolkata.
He said low cost borrowings from overseas market would largely reduce the crowding out effect in the domestic debt market and help maintain fiscal prudence.
According to Sanyal, the government has been able to anchor the inflation level between three to four per cent and the target of real GDP growth of eight per cent is a “stiff and difficult target”.
There is need to reduce the spread between lending and deposit rates, which is very high in India, he said.
“There is no evidence that the interest rates are having any impact on the savings rates. This (reduction of interest rates) will help in lowering the cost of capital without affecting savings,” Sanyal said.