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Which of the following carries out 'Open Market Operations'?
A
Finance Ministry
B
External Affairs Ministry
C
Reserve Bank of India
D
Planning Commission
Correct Answer:
C
Reserve Bank of India
- Open Market Operations (OMO) are carried out by the Reserve Bank of India (RBI).
- Open Market Operations refer to the buying and selling of government securities in the open market by the RBI.
- It is an important monetary policy tool used to regulate the supply of money in the economy.
- When the RBI purchases government securities, money is injected into the banking system, increasing liquidity.
- When the RBI sells government securities, money is withdrawn from the market, reducing liquidity.
- OMO helps the RBI control inflation and maintain price stability.
- It also influences interest rates and the availability of credit in the economy.
- By adjusting liquidity, the RBI supports economic growth and financial stability.
- The Planning Commission was a policy-making body and was replaced by NITI Aayog in 2015.