Set up independent debt office, suggests Survey

To avoid the possibility of conflict between monetary and debt management functions of the Reserve Bank of India (RBI), the Economic Survey today prescribed setting up of an independent office to manage the government debt.

"The process of setting up the proposed independent debt office needs to be carried forward," said the survey, tabled in Parliament.     

In India, the RBI manages marketable government debt as well, besides handling its core function of monetary management.     

The Union Budget for 2007-08 had proposed separation of debt management function from monetary management.     

"One of the primary objectives of establishing a separate debt management office is to provide greater operational autonomy to the monetary policy framework and avoid any possibility of conflict between monetary policy and debt management, which may arise in a situation where both functions are under the same agency," the survey added.     

Subsequently, the Middle Office was set up within the Finance Ministry to prepare a medium-term debt management strategy, issue periodic calendars for borrowings, managing government cash requirements etc.     

The office has begun work in some of these functions such as preparation of a medium-term strategy framework, annual issuance programme, etc.     

Now the survey said this process be taken forward to set up an independent debt office.