Explain the links b/w Government Bond interest rates and RBI's intervention in keeping it low. Finally, how PDMA will solve this problem and deepen Government Bond Market?

Government bonds are 'sovereign' bonds which are floated in the market by RBI when they need to reduce the money (rupee) availability in the market by buying these bonds back RBI can pump money back to the economy so it is an 'instrument' to control money availability and hence inflation.

Let us assume the government bonds promise an interest rate of 10%. When the inflation is more than 10% it will appear 'unattractive' to buy a government bond instead you will buy something whose value is going to inflate by more than 10%. When the inflation is less than 10% people will start buying government bonds. This will result in money becoming less available in the market (and hence as a corollary to the less investment sentiment when inflation is low)

What does the RBI do?

It reduces the interest rate of the government bonds. Atleast it will reduce fresh buying

what is the role of PDMA in this,sir?

PDMA is yet to be formed

It is visualised as a body that will do the 'debt management' of the government (which RBI was doing it so far)

How does this impact the corporate bond market? Which in India is under developed from what I have read. And does the PDMA change any role of state vs. market? Or is it just a more efficient governance structure?

It is contemplated to be more efficient structure for debt management. Right now RBI has dual role of managing government debt and monitoring monetary situation.

why do people prefer government bonds?

Sir, Security

Because they have faith in the government, corporate bonds will also command such value only when they gain the faith of the people. now you know why it is still nascent in India

Sir, But if the govt will soak up the money with govt bonds, it'll have an adverse effect in a corporate bond even developing trust'

it is the other way round only - corporates have to develop trust