EconSurvey
10-year gilt yld could fall 30-50 bps on rating upgrade
This story was originally published at 21:47 IST on 22 July 2024
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MUMBAI – Yield on India's benchmark 10-year government bond may drop 30-50 basis points if the country's sovereign credit rating is upgraded, the Economic Survey for 2023-24 (Apr-Mar) said today. This comes against the backdrop of S&P Global Ratings saying that it would update the rating when the general government deficit goes to sub-7% on a structural basis.
The Economic Survey said that the drop in the benchmark 10-year yield will cause interest rates to decline in general, leading to an overall lower cost of borrowing for households and businesses, which would be a fiscal stimulus in itself. Today, yield on the benchmark 10-year paper ended at 6.97%.
In May, the rating agency had upgraded India's sovereign credit rating outlook to "positive" from "stable". This was due to robust economic growth, sound economic fundamentals and improved composition of government spending.
S&P Global Ratings had also indicated that cautious monetary and fiscal policy that diminishes general government debt and interest burden while improving economic resilience could lead to a higher rating over the next two years. End
Reported by Nishat Anjum
Edited by Aditya Sakorkar
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