Road Ahead for Indian Debt Markets

Some of the major issues relating to government debt need to be highlighted: -

1. Firstly, separation of government debt management from RBI has been, in principle, considered desirable. However, this would be dependent on the fulfilment of three pre-conditions, viz., development of financial markets, reasonable control over fiscal deficit and necessary legislative changes.
2. Secondly, measures to widen the base of the repo market including extending it to CSGL account holders, introduction of longer term repo, roll over of repos, taxation and standardised accounting are the major areas to be focussed in the near future.
3. Thirdly, the feasibility of a "When Issued" market for government securities, which would help efficient price discovery in the primary auctions, is being examined.
4. Fourthly, operational modalities are being finalised for the introduction of STRIPS.
5. Fifthly, order driven screen based anonymous trading in government securities on the stock exchanges is under consideration.
6. Sixthly, dematerialised holding of all bonds, corporate as well as government bonds, is sought to be achieved.
7. RBI is also working towards the development of a system for Real Time Gross Settlement (RTGS), which is expected to be operational in about a years' time.
8. Finally, the implementation of the next phase of the PDO-NDS project involving integration with security settlement system and primary markets operations, automation and inter-connectivity of PDOs, electronic maintenance of record of ownership, etc., is under way.

Concluded.

* Contributed by -
Ankit Chetan & Sudhanshu Duggal,
National Institute of Industrial Engineering (NITIE),
Mumbai.

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