An internal working group of the finance ministry has recommended setting up a statutory body to manage India’s public debt, so that debt management can be separated from monetary policy.
The statutory body, which will be named the National Treasury Management Agency (NTMA), will act as a debt manager handling the borrowings for the centre and states. Despite being a statutory body, NTMA would be under ‘general superintendence and control of the government’ and its head would be directly accountable to the finance ministry.
The objective of the agency is to meet the borrowing needs of the government at lower cost, and function within an ‘acceptable level of risk’.
At present, different agencies like commercial banks, post offices, the Reserve Bank of India, and various departments of finance ministry – external debt management unit and the budget division – are involved in raising debt for the government. Finance minister P Chidambaram had announced in his 2007 budget speech that the government would establish a debt management office to manage India’s public debt.
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