Current account deficit financing to be easier after index inclusion: Chief Economic Advisor Nageswaran

Chief Economic Advisor (CEA) V Anantha Nageswaran, delivered insights during a briefing today, shedding light on the promising future of India's bond market and its potential implications for the nation's economy.

Nageswaran began by highlighting the significance of the Indian government bond market, which stands as the third-largest among emerging economies, trailing only China and Brazil.

However, he underscored a key issue—foreign ownership of Indian government bonds is currently less than 2 per cent, which is notably lower compared to other emerging markets.

Nageswaran said, “The Indian government bond market is the third largest among emerging economies after China and Brazil. But we all know that the following ownership is currently less than 2 per cent, one of the lowest compared to other emerging markets”.

One of the key points Nageswaran emphasized was the potential for currency appreciation when index inclusion, particularly by JP Morgan, begins to occur.

Increased demand from investors for Indian government securities could stimulate a rise in the value of the Indian currency, the rupee.