With total issuances from the Centre, states and companies together estimated at a minimum of ₹40 lakh crore, these liquidity measures would be key to contain borrowing costs. The Monetary Policy Committee meeting minutes too signalled a prolonged pause on rate actions, thus turning the focus on liquidity measures.
The RBI bought back nearly half of the central government’s borrowings so far in FY26 via open market operations, setting a record on OMO purchases.
The central government plan is to borrow ₹14.77 lakh crore via dated securities this fiscal year, and the RBI has bought back ₹6.88 lakh crore of sovereign bonds from the market.
“As states’ fiscal train wreck amid demand draught could imply bond bearishness may continue…the RBI will have to be the bond demand-supply balancing factor for better monetary transmission. We expect OMOs of about ₹5 lakh crore in FY27,” Emkay Global Financial chief economist Madhavi Arora wrote in an early February report.
Banking system liquidity stood at a daily average surplus of ₹2.66 lakh crore, or about 2.6% of NDTL (net demand and time liabilities) in February so far.
Gaura Sengupta, chief economist at IDFC First Bank, also has a similar view. “In FY27, the RBI will need to infuse durable liquidity of at least ₹5 lakh crore to ensure that core liquidity surplus doesn’t dip below 1% of NDTL by March 2027,” she said in a report on Friday. “The liquidity infusion tool is likely to be OMO purchases as this will address some of the adverse demand-supply dynamics facing the bond market,” Sengupta said.
