India has become part of world bond index starting today.

The Indian government has some exciting news to share! Starting this Friday, government bonds or securities will be included in the global bond index. JP Morgan, a leading financial institution, has decided to add Indian government bonds to its Government Bond Index-Emerging Markets, marking the first time ever for such inclusion.

This move is expected to have a positive impact on the Indian economy. With a weightage of 10%, Indian bonds will now be a part of the JP Morgan Emerging Markets Bond Index. Over the course of the next 10 months, the weightage of Indian government bonds in this index will gradually increase by 1% each, starting from June 28, 2024, and ending on March 31, 2025.

JP Morgan had initially announced the inclusion of Indian bonds in the GBI-EM back in September 2023. Since then, there has been a significant inflow of over $10 billion into Indian bonds. This move is expected to further accelerate foreign inflow into Indian bonds, thereby increasing the demand for them.

As a result, the size of the Indian bond market is expected to increase, along with the liquidity and efficiency of the market. In the past, only banks, insurance companies, and mutual funds have been major investors in government bonds. But now, with the inclusion in the global bond index, a larger number of global investors will have the opportunity to invest in Indian bonds. This is expected to bring down the bond yield and reduce the cost of borrowing for the government, ultimately helping to reduce the fiscal deficit.

Moreover, the demand for the rupee is also expected to increase due to the foreign inflow. As a result, the rupee may remain strong in the coming months. This is an exciting development for the Indian economy and is expected to bring in significant benefits in terms of investments and economic growth.

Overall, the inclusion of Indian government bonds in the global bond index is a major milestone that opens up new opportunities for the country's economy. It is a testament to the growth and stability of the Indian market and its attractiveness to global investors. The government is optimistic about the potential impact of this move and is looking forward to the benefits it will bring to the economy.

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