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Setting at rest the controversy with regard to regulation of government bonds for the time being, Finance Minister Arun Jaitley today dropped from the Finance Bill 2015 the proposal to set up a separate Public Debt Management Agency (PDMA), outside of the RBI's ambit.
The minister said however that the government, in consultation with the Reserve Bank, will prepare a roadmap to pursue a separate debt management agency later in line with global practice.
"Since the RBI has been handling public debt management, the government in consultation with the RBI will prepare a detailed roadmap separating the debt management function and the market infrastructure from the RBI and having a unified financial market," Jaitley said.
He made these remarks while initiating the debate on the Finance Bill in the Lok Sabha. The House is expected to approve the Bill later in the day, giving effect to the tax proposals.
The Budget 2015-16 proposal to set up PDMA and shift the regulation of government bonds from RBI to market regulator Securities and Exchange Board of India (Sebi) generated lot of controversy, with the central bank raising concerns and questioning the timing of the move.
"It is...Being decided to delete the PDMA provisions from the Finance Bill for this financial year," Jaitley said.
"This government is committed to unifying the financial market both by making the government securities part of this market as well as creating a proper bond currency derivate market," he added.
