Debt management in India

Abstract

Debt Management in India has been a concern for more than five decades and the focus, since 1971 has been on domestic debt and not on external debt, partially because of geo-political reasons, besides standard text book economic reasons. Post-crisis, given the difficult economic situation and blurring of debt management objectives with those of monetary policy resulted in a debate to bring the two functions under the same agency. In India, fiscal domination of monetary policy left very little flexibility for the Reserve Bank of India, to pursue a monetary policy conducive to the overall objective of development of financial markets, price stability and economic growth. Whereas, several countries with liberalized financial markets opted for a separate debt management office to focus on reducing cost of raising resources and providing effective policy signals to the market.