So long the Government Securities continue to be a ‘neglected’ category in the debt market, perhaps because they have a captive market as banks have to compulsorily hold huge quantities of G-Sec just to comply with SLR (Statutory Liquidity Ratio) requirements, government would be asking for trouble by transferring debt management from RBI. Both the holding pattern of G-Sec and the ratio of G-Sec in SLR need to change. Government, in the present scenario should move to a situation where investment in G-Sec is attractive for retail investors as a more secure component in their savings. Banks also should be given other options to invest their SLR funds (May be the proposed Gold-backed financial instruments could be one such option). When all these are in a transition-phase, GOI and RBI should put off the idea of shifting management of public debt from RBI, at least for a decade. That is the minimum time a change of this magnitude ill take to stabilize and there is no heavens waiting to fall if RBI continues the work of Public Debt Management for which the central bank has developed expertise. A new government office in the present scenario will not be able to manage the show. GOI should learn at least this one lesson from the recent experiences in disinvestment of PSU equity.
- M G Warrier
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