{"id":1992,"date":"2024-03-31T00:31:44","date_gmt":"2024-03-30T19:01:44","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=1992"},"modified":"2024-04-03T07:00:56","modified_gmt":"2024-04-03T01:30:56","slug":"q-in-the-context-of-indian-economy-open-market-operations-refers-to","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-in-the-context-of-indian-economy-open-market-operations-refers-to","title":{"rendered":"Q.\u00a0In the context of Indian economy, \u2018Open Market Operations\u2019 refers to"},"content":{"rendered":"\n<ul class=\"mcq wp-block-list\">\n<li>borrowing by scheduled banks from the RBI<\/li>\n\n\n\n<li>lending by commercial banks to industry and trade<\/li>\n\n\n\n<li>purchase and sale of government securities by the RBI<\/li>\n\n\n\n<li>None of the above<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Answer: (c) purchase and sale of government securities by the RBI<\/strong><\/p>\n<\/blockquote>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"open-market-operations\">Open Market Operations:<\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Open Market Operations (OMOs)<\/strong>&nbsp;are market operations conducted by RBI by way of&nbsp;<strong>sale\/ purchase of government securities to\/from the market<\/strong>&nbsp;with an objective to<strong>&nbsp;adjust the rupee liquidity conditions<\/strong>&nbsp;in the market on a durable basis.<\/li>\n\n\n\n<li>If there is&nbsp;<strong>excess liquidity, RBI resorts to sale of securities<\/strong>&nbsp;and sucks out the rupee liquidity.<\/li>\n\n\n\n<li>Similarly,&nbsp;<strong>when the liquidity conditions are tight, RBI buys securities from the market<\/strong>, thereby releasing liquidity into the market.<\/li>\n\n\n\n<li>It is one of the&nbsp;<strong>quantitative (to regulate or control the total volume of money) monetary policy tools<\/strong>&nbsp;which is employed by the central bank of a country to control the money supply in the economy.<\/li>\n<\/ul>\n\n\n\n<h6 class=\"wp-block-heading\" id=\"Note\">Operation Twist:<\/h6>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The simultaneous buying and selling of Government securities through Open Market Operations of nearly Rs.10000 crores each is called&nbsp;<strong>Operation Twist<\/strong>.<\/li>\n\n\n\n<li>In this mechanism, the RBI&nbsp;<strong>sold the short term G-secs and bought long term G-secs<\/strong>&nbsp;from the market.<\/li>\n\n\n\n<li>This will increase the price of long term G-secs in the market due to its demand and reduce its yield.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Answer: (c) purchase and sale of government securities by the RBI Open Market Operations: Operation Twist:<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[60],"class_list":["post-1992","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-60"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian 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