The continuing large fiscal deficits year after year from 1990s have led to sharp increase in repayment obligations and a reduction in average maturity profile of outstanding public debt, he said.

The gross market borrowings of the government, according to the RBI, amounted to Rs 93,953 crore during the year 1998-99 while the net market borrowings was Rs 62,903 crore.

Pointing about the increasing interest payments on public debts which touched Rs 43,712 crore in 1998-99, rising from Rs 14,021 crore in 1991-92, the governor said that this process could not go on indefinitely.

Jalan said in1991-92, the ratio of gross to net borrowing of the Union government was 1:0.89 which in 1998-99 stood at 1:0.67, implying a 22 paise decline in the net receipt for every rupee of borrowing in this period.

During 1998-99, despite large scale gross borrowings by the government, it has managed to keep the medium and long term interest rates had remained fairly stable.

The governor said that the pressure on market interest rates would become unavoidable unless fiscal deficit of the government and its borrowings requirements were kept within reasonable limits.

The expansion in the aggregate deposits of scheduled commercial banks has been estimated at Rs 1,185,000 crore in the current fiscal by the Reserve Bank of India (RBI).

Jalan has projected 18 per cent growth in non-food bank credit including investments in commercial paper, shares/debentures/bonds and public sector undertakings and private corporate sector. ``Availability of this order of credit should duly meet the demand of the productive sectorsof the economy,'' the governor said, adding that banks should plan their credit operations on the assumption that sufficient liquidity would be available in the current year to finance additional production as per normal banking norms.

In the last fiscal, the conventional non-food bank credit showed a lower expansion of Rs 37,594 crore (12.1 per cent), while the total flow of funds from scheduled commercial banks to the commercial sector, including investments, has been placed at Rs 54,304 crore.

Again, the total resource flow to the commercial sector including capital issues, GDRs and borrowings from financial institutions would be around Rs 1,04,635 crore for 1998-99.

Growth in broad money (M3) for the current fiscal has been projected to be in the range of 15.5 per cent to 16 per cent as against 17.8 per cent growth last fiscal on a point-to-point basis.