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India Gazette
09-06-2025
- Business
- India Gazette
RBI's rate cut likely to lower bond yields as govt announces Rs 26,000 cr G-Sec buyback
By Nikhil Dedha New Delhi [India], June 9 (ANI): Bond yields in India are expected to go down following the recent frontloaded rate cut by the Reserve Bank of India (RBI), says economists ANI spoke with. The economists noted that rate cut is likely to influence the market to adjust to a revised and more accommodative interest rate outlook, pushing dated government securities (G-sec) yields down further. Debopam Chaudhuri, Chief Economist at Piramal Group told ANI 'The frontloaded rate cut is likely to drive a further easing in dated G-sec yields as markets adjust to a revised interest rate trajectory. The RBI's shift to a neutral stance could be initially interpreted as a signal of a pause in the rate-cut cycle'. He further stated that 'these are likely to be short-term adjustments, and bond yields are expected to resume their downward trend once market volatility subsides'. However, in the near term, some upward pressure on yields may emerge as investors may look to book profits after the rally in bond prices. Moreover, the RBI's shift to a neutral policy stance may be initially read by markets as a pause in the rate-cut cycle, which could also cause some temporary volatility in yields. Additionally, the US Federal Reserve is also anticipated to lower its terminal interest rate to around 4 per cent, creating more room for the RBI to continue with its rate-cutting approach. Dipanwita Mazumdar, Economist specialist at Bank of Baroda told ANI 'India's long end yields especially the 10Y part of the curve has priced in the rate cut. Thus we expect it to be largely capped as the change in stance has hinted lesser scope for future monetary policy easing. Hence we do not expect much momentum. However, the short run part of the curve will be more susceptible to the liquidity support given by RBI especially through CRR cut. Thus we expect some prevalence of a steeper yield curve for India in the near term'. In a parallel move aimed at managing its debt portfolio and supporting the bond market, the Government of India has announced a buyback of dated securities worth Rs 26,000 crore (face value). The buyback will be conducted through an auction on June 12, 2025. It will include five securities maturing in 2026: 5.63 per cent GS 2026 (maturing on April 12), 8.33 per cent GS 2026 (July 9), 6.97 per cent GS 2026 (September 6), 5.74 per cent GS 2026 (November 15), and 8.15 per cent GS 2026 (November 24). There is no notified amount for individual securities within the Rs 26,000 crore ceiling. The auction will be held on RBI's E-Kuber system between 10:30 a.m. and 11:30 a.m., and the results will be declared the same day. Settlement will take place on June 13, 2025. With the rate cut and the government's buyback initiative, economists believe bond yields will continue their downward trend in the medium term, providing further support to market liquidity and helping lower borrowing costs for the government. (ANI)
India Gazette
04-06-2025
- Business
- India Gazette
Economists divided on quantum of rate cut, 25 bps or 50 bps, ahead of RBI policy announcement
By Nikhil Dedha New Delhi [India], June 4 (ANI): As the Reserve Bank of India's Monetary Policy Committee (MPC) begins its two-day meeting in Mumbai to deliberate on the key policy rates, economists are divided over the quantum of the rate cut that the central bank should undertake in its June 6 announcement. While some economists argue for a more aggressive 50 basis point (bps) cut to reinvigorate growth, others are in favour of a cautious 25 bps reduction, citing macroeconomic stability and external risks. The divergence in opinion stems from the evolving macroeconomic landscape, where retail inflation has moderated significantly, falling below the 4 per cent mark, and the outlook for domestic growth remains robust. However, concerns over global monetary trends, monsoon impact on food prices, and capital flows continue to influence the policy calculus. Debopam Chaudhuri, Chief Economist at Piramal Group, believes the RBI should go for a bold move by announcing a 50 bps cut. Speaking to ANI, Chaudhuri said, 'The MPC should consider a larger-than-expected 50 basis point rate cut this time. Rate transmission gained traction only after the policy repo rate fell to 6 per cent in April, as earlier tight liquidity conditions had kept market yields elevated. A 50-bps cut now could help make up for that lost time and deliver a stronger boost to economic growth.' He also pointed out that the timing is opportune, with the US Federal Reserve expected to begin easing its policy soon. 'With the US Fed likely to begin cutting rates soon, concerns about narrowing yield differentials between the US and India are likely to diminish. The reduction in borrowing costs would enhance domestic growth prospects and reinforce India's appeal as an investment destination, regardless of the spread with US debt,' he added. On the other hand, Sonal Badhan, Economics Specialist at Bank of Baroda, supports a more conservative 25 bps cut. 'We expect the RBI to lower rates by 25bps this week. This is based on the fact that inflation has significantly moderated and is expected to remain contained in the coming months as well. Also, given the prediction of normal monsoon, pressure on food inflation will be limited,' she told ANI. Badhan noted that the RBI is likely to revise down its inflation projections for FY26 by about 10 bps, reflecting better-than-expected outcomes in Q1. However, she ruled out the possibility of a 50 bps cut for now. 'We believe 50bps is unlikely as June rate cut is a front-loading measure. RBI will also be cautious before it sees the actual spatial distribution of monsoon. Moreover, with the US Fed likely to stay on pause till September 2025, narrowing interest spreads could impact FPI inflows and the Indian rupee. As such, a 25bps cut is more prudent,' she explained. Echoing a dovish stance, M. Govind Rao, Member of the 14th Finance Commission and Chairman of the Karnataka Regional Imbalances Redressal Committee, said there is enough room for the RBI to ease policy further. 'The inflation rate is well within the target, and there is sufficient space to reduce the rate. With uncertainty due to tariff increases and global volatility, it is appropriate to reduce the interest rate to trigger higher investment,' he told ANI. As the MPC concludes its deliberations on Friday, June 6, all eyes will be on Governor Sanjay Malhotra statement at 10 am. With inflation under control and a strong push for investment-led growth, the RBI faces a critical balancing act between growth support and financial stability. (ANI)
India Gazette
28-04-2025
- Health
- India Gazette
With Ayushman Bharat & National Digital Health Mission, India is better prepared for next pandemic says World Bank official
By Nikhil Dedha New Delhi [India], April 28 (ANI): India has made significant efforts to strengthen its healthcare infrastructure after the COVID-19 pandemic, said Priya Basu, Executive Head of the Pandemic Fund at the World Bank. Speaking exclusively with ANI, Basu highlighted the steps taken by India to be better prepared for future health emergencies. Basu pointed out that schemes like Ayushman Bharat and the National Digital Health Mission are key parts of India's strategy to improve healthcare access and infrastructure. When asked if India is better prepared to handle another pandemic, Basu said, 'I would say that efforts have been made in India to improve access to healthcare, healthcare infrastructure. There's the Ayushman Bharat and There's the National Digital Health Mission.' She added that preparing a country for the next pandemic is not an easy task but important lessons have been learned from COVID-19. 'Lessons that involve having that surge capacity to be able to quickly ramp up testing, having the necessary equipment, PPE capacity in hospitals, in terms of ICU units, ICU beds,' she explained. Basu said that while the world is still not fully prepared for the next outbreak, efforts are being made. She also spoke about the Pandemic Fund, a global initiative launched in 2022, which helps low and middle-income countries build their pandemic preparedness. 'The pandemic fund is one shining example of really intentionally working with low and middle income countries to strengthen their capacity,' Basu said. Talking about investments, she said, 'The costs involved or the investments required to get all low and middle income countries to the right level of preparedness are a small fraction of the losses that the world will incur if we are not prepared.' She highlighted a joint study by the World Bank and WHO that estimated USD 150 billion of investment over five years could prepare all countries compared to the trillions lost during COVID-19. Basu also explained how India is benefiting from the Pandemic Fund. 'We have a project in India which is a grant that is blended with loans from the Asian Development Bank and the World Bank, as well as technical assistance from the Food and Agriculture Organisation,' she said. She detailed that a USD 25 million grant from the Pandemic Fund is supporting India's One Health mission by strengthening animal surveillance, animal laboratories, veterinary workforce, and farm biosecurity. India has been an active supporter of the Pandemic Fund from the start. 'India is a founding contributor to the pandemic fund. It is one of the countries that came forward right in the beginning,' Basu said. She also mentioned that India recently doubled its contribution to the fund and sits on its governing board as a voting member. (ANI)
