Rewarding profligacy

.....There is a need, perhaps, for a re-look at the conduct of RBI’s OMOs. In today’s context, they have effectively become a means for the Government to get the central bank to print money to finance its deficits. True, the RBI no longer subscribes to primary auctions of government stock. But by buying these in the secondary market from banks, often just before an auction is scheduled, it is indirectly achieving the same results. The primary fault for this, of course, lies with the Government.......

Read.........