The Finance Ministry has set up a Public Debt Management Cell (PDMC) with a view to streamline government borrowings and better cash management with the overall objective of deepening bond markets.
The PDMC, to be housed at the RBI’s Delhi office, is an interim arrangement and will be upgraded to a statutory Public Debt Management Agency (PDMA) in “about two years”.
The Middle Office of the Budget Division in the ministry will be subsumed into PDMC “with immediate effect”, a Finance Ministry circular said.
The interim arrangement, the circular said, will allow separation of debt management functions from RBI to PDMA in a gradual and seamless manner, without causing market disruptions”.
In his February 2015 Budget speech, Finance Minister Arun Jaitley had proposed to set up a PDMA to deepen Indian Bond market. “I intend to begin this process this year by setting up a Public Debt Management Agency (PDMA) which will bring both India’s external borrowings and domestic debt under one roof,” he had said.
The circular further said that PDMC will have only advisory functions to avoid any conflict with the statutory functions of RBI. The Joint Secretary (Budget), Department of Economic Affairs would be the overall in-charge of the PDMC.
“The transition process from PDMC to PDMA would be implemented by a joint implementation committee (JIC)…,” it said.
JIC would operate under the supervision of the Monitoring Group on Cash and Debt Management with DEA Secretary and RBI Deputy Governor as co-chairpersons. The PDMC would be staffed by 15 debt managers from Budget Division, RBI, current Middle Office and other government units.
PDMC has been tasked to plan government borrowings, including market borrowings and other borrowings, like Sovereign Gold Bond issuance. Other functions of the PDMC is to manage government’s liabilities, monitor cash balances, improve cash forecasting, foster a liquid and efficient market for government securities.
It will also advise government on matters related to investment, capital market operations, administration of interest rates on small savings, among others. Further, it will undertake requisite preparatory work for PDMA.
PDMC has also been asked to develop an Integrated Debt Database System (IDMS) as a centralised data base for all liabilities of government, on a near real time basis. IDMC would be an integral part of PDMC.