On May 4, as the Reserve Bank of India (RBI) Governor Shaktikanta Das announced an out-of-cycle rate hike, the yield on the benchmark 10-year government of India bond (G-sec) rose 3.64 per cent, the highest single-day rise so far this calendar year, to reach their highest levels since May 2019.
In fact, since January 1, benchmark bond yields have risen more than 14 per cent, as Russia's invasion of Ukraine has led to a spike in global commodity prices and disrupted the flow of liquidity.
For the Centre and states, higher yields mean a higher cost of borrowing. Going by the information available so far, things could look especially worrisome for the Centre, as higher borrowing costs add to the higher subsidy burden, which it already faces.
"While we don't look at a single day but the entire span of a year, interest costs and subsidies do point to a situation which is not ideal," a senior government official told Business Standard. "For now, it is manageable, but the latitude to manage shrinks with every uncertainty," the person said.
Bu hikaye Business Standard dergisinin May 06, 2022 sayısından alınmıştır.
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Bu hikaye Business Standard dergisinin May 06, 2022 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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