Government-Securities Acquisition Programme (G-SAP) is a rational attempt by Reserve Bank of India to revive the economy in a best possible way. Substantiate (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The G-Sec Acquisition Programme (G-SAP) is basically an unconditional and a structured open market operation (OMO), of a much larger scale and size.
· The central bank Governor himself called the G-SAP as an Open Market Operations with a ‘distinct character’.
· The word ‘unconditional’ here connotes that RBI has committed upfront that it will buy G-Secs irrespective of the market sentiment.
· This aspect is crucial as an altogether different literature on the subject emerges once the assumption of certainty/commitment is built in.
· In fact, RBI has already clarified that G-SAP 1.0 is not a substitute to other operations like open market operations, but will complement them as a simultaneous measure.
· In RBI’s language, the positive externalities of G-SAP operations need to be seen in the context of those segments of the financial markets that rely on the G-Sec yield curve as a pricing benchmark.
· So, not only governments (both central and states) benefit, but a whole lot of institutions relying on financial markets for long-term supply of funds will also gain.
· The government is seized of the situation and its programmes like the expanded Production-Linked Scheme or the National Infrastructure Pipeline are steps in the right direction.
· The capital expenditure earmarked for these schemes is huge, and a structured programme like G-SAP could not have been announced at a more opportune time.
