Rajiv Kumar, vice chairman of government think-tank NITI Aayog. (Photographer: Pankaj Nangia/Bloomberg News.)

Modi’s Advisor Makes Case For Setting Up Independent Debt Management Office

Niti Aayog Vice Chairman Rajiv Kumar on Friday made a case for setting up an independent public debt management office to manage government’s debt.

Kumar questioned whether the Reserve Bank of India should have the responsibility of setting the monetary policy, play supervisory role for banks, and at the same time manage Indian government's debt.

"In 2014, the Finance Minister in his budget speech had announced, but it has not happened. How do we segregate different aspects of Reserve Bank's responsibilities?" Kumar asked. The government, he said, has been very courageous to give RBI the statutory authority of inflation targeting. "Therefore, who then looks after growth, employment, debt and other legal things in the country. I think those are the things that needs to be discussed."

Many committees in the past have suggested formation of an independent debt management office. Some progress was made during the tenure of the former Governor Raghuram Rajan when a “middle office” was set up as an interim solution to setting up a public debt management agency.

In October 2016, a public debt management cell was set up. The body had an advisory role to avoid overlaps with the statutory role of the RBI as the government’s debt manager.

While speaking at a conference organised by Niti Aayog and think tank EGrow on the future of Indian Banking, Kumar said that India needs few large banks that can compete globally, and there is need to improve governance in state-owned banks and make the boards more accountable.