Indian Debt Market Worried by Pressure from US High Tariffs
The price of Indian government bonds has fallen to its lowest level in four months, with analysts warning that the market may continue to decline as investors worry about the government potentially increasing debt levels to counter the effects of high tariffs imposed by the US.
India's 10-year benchmark government bond yield rose to 6.44% on Tuesday, its highest level since April this year.Bank of Baroda predicts that the yield may further rise to 6.6% in the first quarter of next year.
The market is increasingly worried about India's government potentially increasing debt. After US President Trump announced a 50% tariff on Indian goods imported into the US, export companies called on the government led by Prime Minister Modi to implement relief measures.
India's government recently announced that it will provide a subsidy of 3,000 billion rupees (34 billion USD) to state-owned oil companies to sell liquefied petroleum gas at prices lower than the market rate.