Govt bonds’ JP Morgan index inclusion to boost rupee, help finance CAD: CEA
The inclusion of Indian government bonds in JP Morgan's emerging market debt index is expected to broaden India's investor base, potentially appreciate the rupee, and make it easier for Indian financial institutions to lend money, Chief Economic Advisor V Anantha Nageswaran said on Friday. The move is also likely to simplify financing of the current account deficit (CAD) while reducing government borrowing costs, he said.
Nageswaran, however, also stressed that India's fiscal and monetary policies would need to be cognizant of global perceptions and sensitivities. Increased foreign holdings could introduce volatility in the Indian bond market or currency during times of global uncertainty, even if these fluctuations were unrelated to Indian macroeconomic fundamentals, he obs...