New Delhi, March 23 -- The Reserve Bank of India's (RBI) balance sheet shows that the amount of government paper (including treasury bills) held as on 28 February was Rs.21.34 trillion. It was Rs.15.58 trillion in March 2025.

With RBI's recently announced open market operations (OMOs), which will probably continue this month, the amount will only increase. The increase so far of Rs.5.76 trillion in RBI holdings of government paper is remarkable. An increase of this scale has never been witnessed earlier. Is there an explanation?

Through OMOs, RBI is buying securities from banks to help augment their liquidity. This is usually carried out when liquidity is under pressure, which has been the case this year for a various reasons.

First, g...