Explanation:

Statement 1 and 2: Open market operations are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions. The central bank sells g-secs to suck out liquidity from the system and buys back g-secs to infuse liquidity into the system. These operations are often conducted on a day-to-day basis in a manner that balances inflation while helping banks continue to lend. The RBI uses OMO along with other monetary policy tools such as repo rate, cash reserve ratio and statutory liquidity ratio to adjust the quantum and price of money in the system.

Statement 3: Large open market purchases by the RBI can give the government a helping hand in its borrowing programme and are frowned upon for this reason. In April 2006, the RBI was barred from subscribing to primary bond issues of the government. This was done to put an end to the monetization of debt by the Reserve Bank. However, that didn’t stop the process. With rising fiscal deficit, the RBI has been criticized for accommodating larger government debt by way of OMO.