Operation Twist is a monetary policy tool used by the Reserve Bank of India (RBI) to manage long-term interest rates and stimulate economic growth without altering short-term policy rates. Under this operation, the RBI simultaneously buys long-term government securities and sells short-term government securities of equal value. The objective is to reduce long-term interest rates to encourage borrowing and investment while keeping short-term rates stable. This helps improve liquidity in the market and support economic activity, especially during periods of economic slowdown or uncertainty. Operation Twist was notably implemented by the RBI in 2019 and 2020 to address sluggish growth and ensure smoother transmission of monetary policy.

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