The government has announced its intent to introduce critical Bills to push financial sector reforms. Finance Minister Pranab Mukherjee said: “To take forward the process of financial sector reforms, the government proposes to move these Bills in the Budget Session.”
The bills proposed to be moved include The Micro Finance Institutions (Development and Regulation) Bill, 2012; The National Housing Bank (Amendment) Bill, 2012; Regional Rural Banks (Amendment) Bill, 2012; Indian Stamp (Amendment) Bill, 2012; and Public Debt Management Agency of India Bill, 2012.
Among these, the Public Debt Management Bill is the most critical Bill, which proposes to shift the debt management office from the Reserve Bank to the government. It has been argued if the Reserve Bank, the monetary policy authority, also works as the government’s debt manager, it gives rise to conflict of interest.
The central bank, however, differed on the issue. It argued only central banks had the requisite market pulse and instruments to aid in making contextual judgements, which an independent debt agency, driven by narrow objectives, would not be able to do.