Govt bonds and liquidity
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 December 2011
pls tell me hw govt bonds and liquidity r related and issues going on abt fiscal dificit.
Hari Beldona
(Expert)
07 December 2011
The Reserve Bank of India buy government bonds through open market so it will circulate more money in the market and ease the liquidity situation.
Every purchase of bonds by RBI, government bond auction takes place it is nothing but borrowing by the government to reduce fiscal deficit.
Fiscal deficit=Total expenses-Total revenue generated
It means total expenses of government exceeds the total revenue generated by it.
Every purchase of bonds by RBI, government bond auction takes place it is nothing but borrowing by the government to reduce fiscal deficit.
Fiscal deficit=Total expenses-Total revenue generated
It means total expenses of government exceeds the total revenue generated by it.
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