Two years after bond index inclusion, the money kept coming
Foreign holdings of Indian government bonds have more than doubled since JPMorgan index inclusion. Yields tell the story of a market maturing.
Meera Kulkarni
6 min read
When Indian government bonds entered the global indices, sceptics predicted hot money and volatility. Two years in, the flows have been large, steady and overwhelmingly from long-horizon investors — pension funds and central banks, not hedge funds.
The 10-year yield ground lower
India 10-year government bond yield, %, year-end
The deeper effect is on the government’s own borrowing cost. A structurally lower 10-year yield compounds across every budget: cheaper roads, cheaper railways, cheaper deficits. Index inclusion may end up being one of the highest-return policy decisions of the decade, and it barely made the front pages.
Written by
Meera Kulkarni
Meera covers the macro economy and public finance. She previously reported on the RBI and the Union Budget for a national daily.
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