Business
Jaitley takes pause in setting up public debt management
New Delhi, April 30
The provisions on the
creation of an independent Public Debt Management Agency (PDMA) for
raising public debt have been left out of the Finance Bill 2015-16 taken
up for consideration in the Lok Sabha on Thursday.
This was
stated by Finance Minister Arun Jaitley while commending the bill for
the consideration of the lower house and its passage.
"We have decided to delete the PDMA provisions from the finance bill for this financial year," Jaitley told the Lok Sabha.
As
a corollary of the decision to create a PDMA announced in Budget
2015-16, the Reserve Bank of India (RBI) was given the task of targeting
inflation under a monetary policy framework agreement, he added.
The PDMA's purpose was to manage the public debt, cash and contingent liabilities of the central government.
The establishing of a debt management office to consolidate all debt management
functions
in a single agency and bring in holistic management of the government's
domestic and external debt had the full support of the RBI, the finance
minister said.
The RBI currently oversees public debt management.
Both
Jaitley and the RBI have earlier denied any rift on the issue of
creating a debt management agency equidistant from both the government
and the central bank.
"We have been telling there are no
differences. Where is the question of sorting out," RBI Deputy Governor
S.S. Mundra told reporters last month in Mumbai when asked if all the
differences between the government and the RBI on setting up of a PDMA
have been sorted out.
"There is no disconnect," Jaitley has told reporters here after addressing the RBI's board of directors last month.
RBI
Governor Raghuram Rajan has advocated keeping the proposed public debt
agency independent of the government as well as the RBI to ensure
fiscal discipline.
"The PDMA as a professional organisation,
independent of the central bank and government, is something that is
desirable," he told reporters here.
Rajan said: "Such an
independent structure puts some discipline on the government debt
process and also frees regulation of the need to create some sort of
financial impression."