DMO to be set up this year: FinMin

Finance Minister Pranab Mukherjee had mooted the proposal to introduce the Public Debt Management Agency of India Bill in his 2011-12 Budget speech.

The DMO is expected to be an independent agency under the finance ministrys purview and would be responsible for managing the Centres borrowing programme. The idea of such an agency has gained currency over the last few years as the Centres market borrowings have increased and is being managed by the Reserve Bank of India that is expending much effort on the exercise.

The finance ministry document has also called for continuing with a counter cyclical fiscal policy,which would help in fiscal consolidation and creation of fiscal space in better years.

This would help in recapturing the gains lost during bad years and would provide fiscal space for implementing counter-cyclical policy during the bad years, the status paper said.

This is essential for lowering the fiscal deficit,which in turn would help lower the cost of borrowings.