States need to partake of govt finances: RBI

Rajan for state level committees to check fiscal performance of states

Mumbai: RBI Governor Raghuram Rajan said growth is slow in picking up even as macroeconomic parameters have improved, while stressing the role of state governments in improving fiscal performance.

Inaugurating the conference of the Chief Secretaries/Finance Secretaries and cooperative secretaries of the states on Monday, Rajan said there was a need to make State Level Coordination Committees (SLCCs) more active and effective.

He said the progress made by SLCC was satisfactory in conduct of quarterly meetings. "While India's macroeconomic parameters have improved, growth was still slow in picking up," Rajan said, emphasising the importance of fiscal consolidation in terms of both, quantitative and qualitative dimensions.

Rajan also highlighted the need for improvement in governance structure, capitalisation and resolution mechanism in the cooperative banking sector. He stated that without efficient governance, capital infusion would not benefit the sector, as it would function as a "leaky bucket". He also emphasised the need for prompt corrective action and much stronger accountability in the co-operative banking sector.

SLCCs have been recently reconstituted in each state to monitor unauthorised collection of deposits and they meet more frequently under the chairmanship of Chief Secretaries/ with participation of senior level officials of the states and the regulators, an RBI statement said. Besides Rajan, Sebi chairman UK Sinha, NABARD chairman Harsh Kumar Bhanwala. RBI Deputy Governors HR Khan, Urjit Patel and SS Mundra and other senior government officials attended the conference.