The Syndicate Bank Staff Association (SBSA), an affiliate of the National Organisation of Bank Workers (NOBW), has called upon the Union government to set up an autonomous debt management office (DMO) to manage the debt of both the Union and State governments.
In a statement issued here on Saturday, association national secretary K.S. Bhatt said the aim of the proposed DMO was to separate debt management from monetary management of various banks so that any conflict of interests between the two could be avoided.
He said the interest rate setting and use of other instruments such as cash reserve ratio and open market operations by the Reserve Bank of India (RBI) could be clouded by debt management objectives. The government should also come out with details such as whether the proposed DMO should focus on the bank's cash and investment functions.
Mr. Bhatt said the government should come out with a White Paper, giving details about whether the office should manage external debt, before setting up a full-fledged DMO. The State governments could not directly borrow money from abroad as the sovereign risk was essentially borne by the Centre. It was very important that the relationship between the Union and the State governments and that of both with the RBI be taken into account before giving shape to the structure of DMO.
He said the proposed debt management office should be an independent, autonomous body with equal participation of the Union and the State governments and the RBI, with independent views, goals and objectives.
Mr. Bhatt said the Union Budget presented by Union Finance Minister Pranab Mukherjee was a routine budget as far as the salaried class was concerned.
The Budget did not fetch anything for the common man and the salaried middle-class, he alleged. The enhancement of individual income tax exemption limit from Rs.1.8 lakh to Rs.2 lakh was very negligible.
The Finance Minister had miserably failed to control price rise and inflation. The prices of essential commodities would gallop in the coming days owing to hike in the service tax from 10 per cent to 12 per cent and the excise duty from 10 per cent to 12 per cent, Mr. Bhatt alleged.
Though there was an enhancement in agriculture lending, Mr. Mukherjee had not mentioned about the source of repayment, he said.
Mr. Bhatt said the cost of agriculture products would increase and poor farmers were likely to be caught in the debt trap again owing to hike in freight charges.