Indian governments have always been circumspect around foreign investment #debt markets. The taper tantrum was one such event that added to this discomfort. However, over the years, the current political dispensation has been very pro-active and disciplined in its...(1/7)
...approach towards the fiscal. In hindsight, its call to not stretch its finances during the #COVID19 phase, but deliver targeted measures, has worked very well for the country from the eyes of rating agencies. The last couple of years have witnessed a shift in attitude...(2/7)
...towards foreign investments in fixed income. A key stumbling block towards bond inclusion has always been the fact that India does not have an fully convertible capital account. This means that India does not allow local currency to be exchanged freely for foreign...(3/7)
...currency. Therefore, no unrestricted access for foreign investors. Note here that even when India opened its capital account in 1991, it had restrictions imposed on inflows into debt by foreign investors. However, following the 2020 budget announcement, in Mar'20 the...(4/7)
...#RBI fully opened up specific categories of government securities for non-resident investors without any restrictions. This was called the Full Accessible Route (#FAR) and was India's preparatory step towards bond inclusion. Since its introduction in Mar'20, FAR bonds...(5/7)
...have risen significantly to a reported 20% (1/5th) of India's o/s central government bonds, just shy of $200bn, spread over 14 securities, from just 4 securities during its introduction. However, foreign ownership in non-FAR bonds (regular G-Secs) have been on the...(6/7)
...way down and on the whole, foreign investors have only utilised 37% of utilised investment limits in the general category and 16% in the long-term category....(7/7)
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