In the context of Indian economy, ‘Open Market Operations’ refers to

In the Indian economy, Open Market Operations (OMOs) refer to the purchase and sale of government securities (G-Secs) by the Reserve Bank of India (RBI) in the open market [1]. This mechanism is a key monetary policy tool used to regulate durable liquidity and manage inflation [2]. When the RBI buys government bonds, it injects liquidity into the banking system, increasing the money supply and potentially lowering interest rates [2]. Conversely, when the RBI sells these securities, it absorbs excess liquidity from the economy to control inflationary pressures [1]. These operations can be 'outright,' which are permanent transactions, or temporary repo/reverse repo transactions [1]. While commercial banks and financial institutions participate in these trades, the primary objective is the central bank's management of the money supply and interest rate benchmarks [4].

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > 3.4 POLICY TOOLS TO CONTROL MONEY SUPPLY > p. 42
3. [4] https://www.federalreserve.gov/monetarypolicy/openmarket.htm