Monetary Policy Committee and public debt management agency

The government will soon decide the structure of the Monetary Policy Committee (MPC), which will fix the benchmark interest rate of the RBI and set inflation targets. The government is also planning for setting up a non-statutory public debt management agency (PDMA) in the next fortnight. The government has proposed to set up the MPC, which will consist of representatives from the Finance Ministry and RBI, to decide on interest rate.The procedure for obtaining Cabinet approval, that process is in very advanced stage. Presently, the idea is to start with a non-statutory PDMA. A non-statutory PDMA would be an interim arrangement before an independent agency is set up for managing the government borrowing programme. At present, RBI is handling the government's borrowing programme. The setting up of PDMA would require amendments to the RBI Act. The agency would be set up after the Cabinet approval, while a full-fledged PDMA would become operational only after amendment to the RBI Act.

By: Vishal