Reservations expressed by the Reserve Bank of India (RBI) notwithstanding, North Block, the finance ministry headquarters, is going ahead with its plans to set up a full-fledged Debt Management Office (DMO) to manage the government debt.
"The government will move towards a full-fledged DMO. The draft legislation has been prepared. Maybe the RBI governor has some genuine concerns which are being addressed in the design and structure of DMO. Now it will go to other stakeholders within the government," said a finance ministry official.
Finance Minister Pranab Mukherjee has also been briefed on the draft legislation, but he is yet to see it formally.
Once comments from all stakeholders are received, including RBI, the Bill will be sent to the law ministry.
After it is vetted, it will go to the Cabinet for approval to be tabled in Parliament. Simultaneously, the finance ministry will start preparatory action on setting up DMO.
The ministry is seeking cooperation from RBI, as it feels DMO can become successful only in close coordination with the central bank.
"DMO has to learn from RBI's experience. So, the central bank will have to do handholding," the official said.
RBI Governor D Subbarao is against shifting DMO to the finance ministry because of manpower issues.
The finance ministry has assured that all 21
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