Pangs of Separation: Debt Mgmt & Monetary Policy

Well over 15 years ago, a working group of the Reserve Bank of India first suggested the separation of its debt management and monetary policy functions of the central bank. In keeping with global practices of the time, the group made out a case for separating the role of a bank in managing borrowings for the central and state governments, leaving the RBI to focus mainly on setting interest rates and price stability. Although the government first announced its intention to form a new debt management office in 2007, there has been little progress. The move came appropriately at a time when the process of fiscal consolidation was well underway.............

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