In order to manage government borrowing programme, the Finance Ministry is likely to set up a full-fledged independent public debt management agency (PDMA) by the end of 2018, which would help to resolve issues relating to conflict of interest as RBI decides on the key interest rates as well as undertakes buying and selling of government bonds.
At present, the government debt, including market borrowings, is managed by the Reserve Bank of India. Last year, moving towards an independent PDMA, the Finance Ministry as an interim arrangement had set up a Public Debt Management Cell (PDMC) at RBI's Delhi office, to allow separation of debt management functions from RBI to PDMA in a gradual and seamless manner, without causing market disruptions and it has given the overall charge of the PDMC to the Joint Secretary (Budget), Department of Economic Affairs.
Currently, the PDMC has only advisory functions to avoid any conflict with the statutory functions of the RBI. PDMC has been tasked to plan government borrowings, including market borrowings and other borrowings, like Sovereign Gold Bond issuance. Other functions of PDMC are to manage government's liabilities, monitor cash balances, improve cash forecasting and foster a liquid and efficient market for government securities.