The Indian Bond Goes Global

NEW DELHI: A few weeks ago, the JP Morgan Bond Index included India—the last big emerging market to be included. This proposal in the works for nearly a decade is seen as a vote of confidence in India. It is akin to a stock being included in the Sensex or Nifty-50—making it an automatic favourite with investors. The JP Morgan Bond Index is one of the three big global debt funds and has an estimated corpus of around $230 billion. Given that the Indian market has been accorded a weight of 10 percent in the index, this would mean that the country can eventually expect about $23 billion inflows into government securities. Given that this inclusion will trigger a demonstrative effect with other debt funds, India can expect larger inflows. To unpack the macroeconomic implications of this development we spoke to Saugata Bhattacharya, Senior Vice President at Axis Bank and a keen observer of the Indian economy.