The government has decided to borrow Rs 3.5 lakh crore from the market in 2017-18.

: The Finance Ministry is likely to set up a full-fledged independent Public Debt Management Agency or PDMA by the end of next year to manage government's borrowing programme which runs into lakhs of crores. At present, government debt, including market borrowings, is managed by the Reserve Bank of India (RBI). As an interim arrangement for a full-fledged agency for managing public debt to be called as Public Debt Management Agency (PDMA), the government last year set up Public Debt Management Cell (PDMC) at the RBI's Delhi office last year. PDMA should hopefully be functional in the last quarter of 2018, sources said.The aim of setting up the Public Debt Management Agency (PDMA) is to resolve issues relating to conflict of interest as the central bank decides on the key interest rates as well as undertakes buying and selling of government bonds.It was agreed to initially set up a PDMC as an interim arrangement before setting up of an independent and statutory PDMA in due course and it was decided that the work for moving towards PDMA would be taken up in a phased manner, as per the finance ministry document.Currently, the PDMC has only advisory functions to avoid any conflict with the statutory functions of the RBI. The Joint Secretary (Budget) in Department of Economic Affairs is the overall in-charge of the PDMC.The PDMC has been tasked to plan government borrowings, including market borrowings and other borrowings, like Sovereign Gold Bond issuance. Other functions of PDMC are to manage government's liabilities, monitor cash balances, improve cash forecasting and foster a liquid and efficient market for government securities.The government has decided to borrow Rs 3.5 lakh crore from the market in 2017-18, around Rs 75,000 crore lower than the current fiscal year.

However, gross borrowing has been pegged at Rs 5.8 lakh crore for 2017-18, marginally lower from Budget estimate of Rs 6 lakh crore for the last fiscal year.In his February 2015 Budget speech, Finance Minister Arun Jaitley had proposed to set up a Public Debt Management Agency to deepen the Indian bond market.