Message from market

RBI must be mindful of inflation risks of higher borrowing

All is not well in the Indian bond market. The Reserve Bank of India (RBI), which is also the government’s debt manager, is unwilling to let yields on 10-year Central government bonds go above the 6 per cent mark. But investors are demanding higher yields and are not ready to buy government bonds at the given price. As a result, the central bank has not been able to sell a large proportion of government bonds in recent weeks and is being picked up by primary dealers. The yield on 10-year government bonds in the market has gone up from about