Low interest rates to stay

With the improvement in the fiscal status of the country, interest rates will continue to remain low over the long term, according to Vijay Kelkar, adviser to finance minister.

"The government was improving its discipline in fiscal management and interest rates would continue to remain low over the long term," he said at the two-day seminar on emerging markets organised by Capital International here yesterday.

The fiscal stress was not just restricted to the Centre but state governments were also facing financial problems due to declining revenues of the government, he said.

"The tax to gross domestic product ratio has also lagged. But now, the situation will change with the levy of tax on the services sector, which has over 50 per cent share in the indian economy," Kelkar said.