Lok Sabha Question No. 545 (UNSTARRED), answered on 2016-11-18
Subject: Public Debt Management Cell
Ministry: FINANCE
Asked by: ANURAG SINGH THAKUR, K. GOPAL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

LOK SABHA ADMITTED UNSTARRED QUESTION No. 545 for WRITTEN REPLY TO BE ANSWERED ON FRIDAY, THE 18 TH  NOVEMBER, 2016 KARTIKA 27, 1938 (SAKA)

## PUBLIC DEBT MANAGEMENT CELL

## 545. SHRI ANURAG SINGH THAKUR:

DR. K. GOPAL:

Will the Minister of FINANCE be please to state:

- a. whether the Government has set up a Public Debt Management Cell (PDMC), if so, the details and salient features thereof;
- b. whether the debt management functions of the Reserve Bank of India (RBI) would now be performed by this cell, if so, the details thereof; and
- c. whether PDMC would be upgraded to a statutory body in about two years and if so, the details thereof?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

- (a)    to  (c)      Yes,  the  Government  has  set  up  a  PDMC.  The  notification  for  setting  up  of PDMC was issued vide Budget Division OM F.No.1/1/2010 MO (Vol.II) dated October 4, 2016 (copy enclosed). The details and salient features are as given under:
- i. The  Public  Debt  Management  Cell  (PDMC)  has  been  set  up  in  Budget  Division, Department of Economic Affairs (DEA), Ministry of Finance (MoF), as an interim arrangement before setting up an independent and statutory debt management agency, namely Public Debt Management Agency (PDMA) of India, in due course.
- ii. This interim arrangement will allow separation of debt management functions from RBI to PDMA in a gradual and seamless manner, without causing market disruptions.
- iii. The PDMC will have only advisory functions to avoid any conflict with the statutory functions of RBI. It will have following functionalities:
- a. Plan borrowings of Gol, including market borrowings, other domestic borrowing  activities  of  Gol  through  specific  products,  including  Sovereign Gold Bond issuance.
- b. Manage  Central  Government  liabilities,  including  Internal  Debt,  Guarantee proposals and Contingent Liabilities, and National Small Saving Fund.
- c. Monitor  cash  balances  of  the  Government,  improve  cash  forecasting  and promote efficient cash management practices.
- d. Foster a liquid and efficient market for Government securities.
- e. Analyse and advise concerned Divisions of DEA on the proposals of External borrowing  as  regards  cost,  tenure,  currency,  hedging  requirements,  etc.  and monitor  development in foreign exchange markets. External borrowing proposals would, however, continue to be negotiated by MI and BC Divisions and AAA Division will continue to provide requisite back office support.
- f. Develop  an  Integrated  Debt  Database  Management  system  (IDMS)  as  a Centralised data base for all liabilities of Gol, on a near real time basis.
- g. Advise on matters related to Investment, Capital Market operations, Guarantee proposals, administration of interest rates on Small savings, and various loans and  advances given by Gol.
- h. Undertake  requisite  market  interface  with  various  stakeholders,  including Government departments, Central Bank, investors, primary dealers, financial market  regulators,  market  participants,  etc.  to  carry  out  assigned  functions efficiently.
- i. Undertake  such  research  work,  including  those  relating  to  new  products development,  market  development,  risk management,  debt  sustainability assessment, and other debt management functions, as and when required by Ministry of Finance.
- j. Undertake requisite preparatory work for PDMA.  The  Joint Secretary (Budget), Department of Economic Affairs, Ministry of Finance would be the overall in-charge of the PDMC.
- iv. The  transition  process  from  PDMC  to  PDMA  would  be  implemented  by  a  Joint Implementation Committee (JIC) to be chaired by JS (Budget), with members from Government  and  RBI.  JIC  would  operate  under  the  supervision  of  the  Monitoring Group on Cash and Debt Management (MGCDM) with Secretary, Economic Affairs and DG, RBI as Co- chairpersons. The MGCDM would act as a coordinating platform in the interim arrangement to ensure smooth conduct of fiscal, monetary and liquidity management, along with debt  management.

As mentioned in (a)  to (c)   (iii) above, PDMC will have only advisory function to avoid any conflict  with  statutory  debt  management  functions  of  RBI.  Thus,  RBI  will  continue  to perform its statutory function relating to debt management.

PDMC  is  expected  to  be  upgraded  to  a  statutory  body  (PDMA)  in  about  2  years.  The transition process from PDMC to PDMA would be implemented by a Joint Implementation Committee (JIC) to be chaired by JS (Budget), with members from  Government and RBI. JIC  would  operate  under  the  supervision  of  the  Monitoring  Group  on  Cash  and  Debt Management (MGCDM)  with Secretary, Economic Affairs and DG, RBI as Cochairpersons.

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