A T-bill sell-down will stop the rupees from being given as loans by banks, kill demand and reduce the central bank notes (rupees) coming up for redemption in foreign exchange markets in the ensuing period.
A too rapid sell down of Central Bank Treasuries however can stop interest rates falling quickly, deny the use of inflowing foreign capital in the economy and prevent an economy from moving into a fast 'V' shaped recovery.
Crowding Out
In the aftermath of previous balance of payments crises, when a country is under an IMF program, a combined target of a floor on foreign reserves and a ceiling on reserve money forces Treasury bills to be sold, preventing interest rates from falling rapidly.
A third target on the budget deficit - in the form of a ceiling on domestic borrowing - create conditions in credit markets to make it possible for the first two targets to be achieved.
In a 2008 column, LBO's economics columnist fuss-budget labeled the process