Business Standard / New Delhi Aug 14, 2009, 00:20 IST
One conspicuous missing link in all the current discussions on a Debt Management Office (DMO) is the consent needed from the states in that connection (‘Good idea, bad timing’, August 8). State government debt is a state subject in the Constitution. Article 246(3) and List II ensure that the state legislatures have exclusive powers to make arrangements for their public debt. There is nothing on record to show that the DMO proposal was discussed with states before the government decided to set up a Middle Office to pursue the matter. The Internal Working Group (IWG), which recommended it did not have any official to represent the states. One can expect a situation where the states, particularly those under the opposition, do not agree to hand over the management of their public debt to the new agency saying that they are satisfied with the RBI handling the matter. As of now, RBI is insulated from centre-state politics. It would be an odd situation and a problem in coordination if the public debt of some states is handled by the DMO and that of others by the RBI.
A Seshan, Mumbai
Readers should write to:
The Editor, Business Standard,
Nehru House,
4, Bahadur Shah Zafar Marg,
New Delhi 110 002,
Fax: (011) 23720201;
letters@bsmail.in
Content Guide
