MUMBAI: The Reserve Bank of India on Friday said it would purchase bonds worth Rs 1.2 lakh crore in the September quarter under its G-Sec Acquisition Program 2.0 as part of its efforts to keep liquidity in the economy ample and to keep government bond yields pinned lower.
The central bank said it would also purchase bonds worth Rs 40,000 crore, including state development loans worth Rs 10,000 crore, under the ongoing GSAP 1.0 through an auction on June 17. The move will take RBI’s acquisition of government bonds under the plan to Rs 65,000 crore.
RBI Governor Shaktikanta Das said he hopes the market would respond appropriately to its latest announcement.
GSAP is basically an unconditional and unstructured purchase of government bonds by the central bank from the market players. The measure was introduced by the central bank after its April monetary policy meeting in an effort to keep bond yields lower, which had surged in the run-up to the meeting amid inflation fears.
On the inflation front, RBI continued to maintain its stance of looking through the short-term spikes as it forecasted a consumer price index-based inflation of 5.1 per cent for 2021-22, which will be higher than its target of 4 per cent but within policy range of 2-6 per cent.
The RBI Governor acknowledged that surging global crude oil prices, logistic costs and commodity costs alongwith the second wave in India could pose upside risk to inflation. However, the Monetary Policy Committee maintained that overall risks to inflation are balanced.
The announcement of the second GSAP programme comes in the backdrop of media reports that the government might need to borrow an additional Rs 1.6 lakh crore over and above its budget estimate of Rs 12 lakh crore for the financial year to meet the shortfall to states on GST compensation.
Informist Media on May 31 said the central bank has given fresh assurances to the centre that its borrowing programme will be managed smoothly this financial year.