Comfortable with the rupee stable and foreign exchange reserves of over $85 billion, the government is planning to prepay foreign loans worth over $3 billion to reduce its interest burden and fiscal gap.

"It (prepayment of foreign debt) will be much more than what we did last fiscal," Finance Secretary D C Gupta said on the sidelines of the India-Asean Business Summit in New Delhi on Friday.

The finance ministry is processing external debt portfolio and the high-cost debts would be shortlisted accordingly. The government will raise resources from the domestic market to prepay the foreign loans, Gupta said.

Last fiscal, government prepaid high-cost loans slightly less than $3 billion taken from World Bank and Asian Development Bank.

The prepayment of costly foreign debts along with the buy-back of securities and debt swap of state loans would reduce the Centre's interest burden, now at Rs 1,23,200 crore (Rs 1,232 billion).

Gupta said the prepayment would continue as the country's forex reserves position was comfortable at over $85 billion.

To a query, he said the rupee was stable and was getting stronger.

"There is quite a bit of stability in the rupee," he said. The exchange rate, now at about Rs 46 a dollar, had improved significantly in the last few months.