An independent debt management agency will be set up to help enforce fiscal responsibilities among states and the central government, Finance Minister Pranab Mukherjee said Monday. “The government is in the process of setting up an independent debt management office in the finance ministry.

A middle office is already operational and in a next step, I propose to introduce the Public Debt Management Agency of India Bill in the next financial year,” said Mukherjee while presenting the budget for 2011-12 in the Lok Sabha.  

He said statutory targets set under the Fiscal Responsibility and Budget Management (FRBM) Act of 2003 had a positive impact in reducing fiscal and revenue deficits.  
"In the course of a year, the central government will introduce an amendment to the FRBM Act, laying down the fiscal roadmap for the next five years,” Mukherjee said.
He said the 13th Finance Commission has worked out a fiscal consolidation roadmap for states, requiring them to eliminate revenue deficit and achieve a fiscal deficit of three percent of their respective gross domestic products (GDPs) latest by 2014-15.

"It has also recommended a combined state debt target of 24.3 percent of GDP to be reached during this period,” he added.