Key Points
RBI is stepping in to ease banking system liquidity conditions as a national election which stretches over six weeks is hurting government spending despite strong tax collections...
Typically, government spending slows during polls and picks up only after a new government is in place and a budget is presented...
The buyback of securities is a liquidity injecting tool, and will help in easing liquidity in the system, a source familiar with the government's thinking said.. India's average banking system liquidity has been in deficit since April 20 and is expected stay in deficit or close to neutral this month, according to economists...
"The buyback announcement could be an exercise to infuse liquidity because we have an interim budget and the general election, so the government expenditure is lesser than usual," Gaura Sen Gupta, India economist at IDFC FIRST Bank said...
Since mid-April, the Reserve Bank of India (RBI) has infused Rs 1.7 lakh crore via variable rate repo auctions, Citi economists said in a note on Monday.. "The RBI might be anticipating that the election-related delayed decision-making in the government might constrain spending and in turn cause further liquidity tightness," they said...
You might be interested in
FPIs' investments in govt bonds more than doubled this year
28, Dec, 23The influx of foreign money after a three-year hiatus has kept local sovereign bond yields - and therefore corporate borrowing costs - anchored amid a volatile inflation environment and a tight liquidity stance by the Reserve Bank of India.
Govt saves Rs 2.73 lakh crore in last 9 years by adopting DBT: FM
15, Aug, 23New Delhi, Aug 14 (PTI) Finance Minister Nirmala Sitharaman on Monday said the government has saved Rs 2.73 lakh crore of taxpayers’ money in the last nine years by adopting Direct Benefit Transfer (DBT) to send money to targeted beneficiaries and weeding out bogus accounts. It has helped plug leakages and better targeting of genuine […]
India banking liquidity to tighten as long-term repos mature
18, Mar, 23India's banking system liquidity is likely to tighten further on a more persistent basis with upcoming tax outflows and maturing repurchase agreements with the central bank, analysts said.
Liquidity surplus at 9-mth peak on high govt spend, FPI inflows
14, Apr, 23Typically, around 60% of government expenditure occurs in the first six months of a financial year. The Centre has earmarked Rs 10 lakh crore in the current fiscal for capex. Last fiscal, the government adopted a slower approach to capex spending until clarity emerged on its revenue streams, analysts said. According to analysts, it was likely that amid its large spending push, the government was currently availing of the WMA.