India's Inclusion in Global Bond Indices
Most of the measures for India's inclusion in global bond indices are completed, with investor-friendly steps underway, according to RBI Governor Sanjay Malhotra.
- India is optimistic about being included in Bloomberg's Aggregate Bond Index following its inclusion in JPMorgan's emerging market debt index in 2024.
India's External Position
India's economy is stronger compared to the 2013 taper tantrum period, with the current account deficit at 0.6% as opposed to nearly 5% in 2013.
- Foreign exchange reserves cover more than 10 months of imports, equating to 89% of external debt, surpassing IMF's reserve adequacy metric.
- Both current account and capital account remain resilient.
- The rupee is market-determined, and RBI interventions are aimed at curbing excessive volatility.
Domestic Growth
Investment activity is robust despite global uncertainties, with high capacity utilization and supportive financing conditions.
- Investments are notable in sectors like defense, renewable energy, hospitality, and shipbuilding.
- Deposit growth is around 12%, aiding credit growth and reflecting healthy diversification in household savings.
Reserve Management and CBDC
The RBI's investment strategy prioritizes safety, liquidity, and returns, while gold holdings focus on diversification and stability.
- The central bank digital currency (CBDC) pilot has reached over one crore users, handling transactions worth approximately Rs 38,000 crore.
- RBI is working on interoperability and use cases for CBDC in wholesale and cross-border applications.
