A Prasanna, chief economist of I-Sec PD, said it is puzzling that what could have changed from December to February so significantly that the RBI had to lower its inflation forecast. “We thought that December forecast was more credible and one would have assumed that all the changes in key variables like oil prices and rupee would have been factored into their December forecast.”
“There is going to be some interim dividend in March, which means that to that extent, open market operations (OMOs) will come down,” he added.
In terms of his expectations on the OMO front, Prasanna said that, “Reserve Bank of India (RBI) has already started tapering OMOs so in March, if we assume, that there is going to be interim dividend payment, the OMO numbers have to be adjusted accordingly. Assuming that the RBI is going to pay Rs 20,000-30,000 crore of interim dividend, we expect around Rs 30,000 crore of OMO in March and that number will probably further reduce April onwards.”