The Reserve Bank of India is expected to maintain its proactive liquidity management strategy by injecting approximately ₹5 lakh crore into the financial system during the upcoming fiscal year. This massive capital infusion is designed to address a persistent supply-demand imbalance in the bond market while ensuring the efficient transmission of previous interest rate cuts. As of February 2026, the central bank has held the benchmark repo rate steady at 5.25% following a cumulative reduction of 125 basis points over the past year. To complement these rate actions, the RBI has already deployed record-breaking tools, including buying bonds worth ₹6.5 lakh crore and executing ₹4.7 lakh crore in currency swaps throughout 2025. The upcoming liquidity operations focus on absorbing the heavy supply of government securities. With the fiscal deficit for FY26 budgeted at 4.4% of GDP and gross market borrowings projected at ₹14.8 lakh crore, the influx of bonds threatens to push yields higher. The RBI’s planned infusion aims to stabilize these borrowing costs and provide "durable liquidity" to a banking system that has seen surpluses fluctuate between ₹1.5 lakh crore and ₹3.4 lakh crore. Economic growth remains a key driver for these interventions. India’s GDP growth forecast for FY26 has been revised upward to 7.4%, supported by resilient domestic demand and robust services activity. Meanwhile, headline inflation has remained benign, projected at approximately 2.1% for the full year. This "Goldilocks" environment—characterized by high growth and low inflation—provides the central bank with the necessary room to focus on market liquidity without fueling price pressures. Market participants are particularly focused on the yield of the 10-year benchmark bond, which recently saw significant volatility. Yields dropped sharply to around 6.53% following the announcement of localized liquidity measures, but analysts anticipate they could range between 6.6% and 6.75% as the new auction calendar commences. By utilizing a combination of Open Market Operations (OMOs) and long-term US dollar-rupee swaps, the RBI intends to keep the overnight call money rate aligned with the repo rate. These operations are vital for non-banking financial companies (NBFCs) and small businesses, as they lower the overall cost of capital and encourage credit flow into productive sectors of the economy.