The euphoria over India’s sovereign rating upgrade by S&P Global lasted no more than a weekend. Traders cheered as the benchmark 10-year bond yield slipped from 6.50% to 6.40%, only to reverse swiftly on the back of the government’s announcement of GST rate rationalisation. What promised relief soon hardened into despair: fiscal support was necessary, but it has come at a cost bond markets won’t ignore.India’s economy is caught in a complex bind. Urban households are deleveraging, which is a reflection of stagnant real wages and dimmer employment prospects. Corporates, still scarred by the IL&FS crisis, have spent the past seven years unwinding debt rather than investing. Even the government has demonstrated fiscal restraint, keeping deficits in check post-COVID.
.png)
