1. Submitted to:- Rutvi sarang By:- Hiral Mehta(26)

2.  Fiscal policy encompasses the taxation, expenditure, and debt management of the government. It is used to pursue national economic goal; full employment, price stability and economic growth.  In order to foster the development of govt. securities market, it was imperative to migrate from a regime of administered interest rates to a market-oriented system.  Due to it reserve bank of India in early 1990 initiated several measures.

3.  First, it introduced the auction system for issuance of govt. securities.  Second, as the captive investor base was viewed as constraining the development of market, the statutory prescription for banks, investments in govt and other approved securities was skilled down from the peak level in February 1992 to the statutory minimum level of 25% by April 1997.

4.  As a result:- 1. the focus shifted towards the widening of the investor base. 2. A network of intermediaries in form of primary delars was developed. 3. Retail participation has been promoted in primary as well as secondary market. 4. Reserve bank also introduced new instrument with innovative features.

5.  Third, with the discontinue of the process of unconstrained recourse by the govt. to the reserve bank throw automatic monetization of deficit and conversion of non-marketable securities to marketable securities, the RBI gained more operational freedom.  Fourth, in an effort to increase liquidity, the RB has, since the late 1990s, persuade a strategy of passive consolidation of debt by raising progressively higher share of market borrowing through reissuance.  Fifth, improvement in overall macro economic and monetary management as resulted into lower inflation, lower inflation expectation, and price stability has enabled the elongation of the yield curve to maturities upto 3 years.  Finally, the RB has undertaken measures to strengthen the technological infrastructure for trading and settlement.