India’s Inclusion in Global Bond Index – A Structurally Constructive Move
JP Morgan has announced the inclusion of Indian G-secs in the GBI-EM Global index suite. This move holds significant structural benefits for cost of capital, the balance of payments, the Indian Rupee, and long-term growth. Explore the macro-implications by referring to the note.
- Market consensus of a substantial $30 billion debt inflows over the next 18 months
- Enhanced funding for the current account deficit to provide stability to the Indian Rupee
- An opportunity for the Reserve Bank of India to build foreign exchange reserves
- Potential for reduced borrowing costs for both the government and the private sector
- A positive structural development for India’s long-term growth prospects
- Risks – heightened vulnerability to external shocks and intensified scrutiny of fiscal policy