The administered rates on pension and PFs "must take into account the inflation rates, the effective term of the deposits and available tax exemptions", it has pointed out. This will ensure that the after-tax real rate of interest paid on these borrowings reflects the market rates and is consistent with the overall demand and supply conditions in the debt market.

The Survey has attributed the increase in fiscal deficit, despite a declining primary deficit, in part to the rise in interest costs.

The Survey has also remarked on the large government borrowing requirement, reflected in the substantial share of government securities in banks' portfolio. It further adds, this is also a telling sign of the banks' preference for default risk-free assets.

Regarding the flow of non-food credit from banks to the commercial sector, it registered a growth of 11.9 per cent till January 12 this year, compared with 10.5 per cent in the corresponding period of the previous year.

As for broad money supply growth during the year, the Survey has attributed the sudden spurt in money supply to the "sterilised" foreign exchange intervention by RBI through purchase of the State Bank of India's India Millennium Deposits (IMDs) for meeting large borrowing requirements of the government. "Given the large borrowing requirements of the Central government and the greater flow of credit to commercial sector, it was necessary to ensure adequate liquidity through such intervention," it said.

This enabled RBI to reduce monetised deficit by off-loading Central government's dated securities in its portfolio to the market. "Thus RBI could minimise the impact of IMDs on growth in money supply," it remarked, adding that the year-on-year growth in broad money at 15.8 per cent as on January 12 this year was well below the long-run growth rate of around 17 per cent.