New Delhi, September 26, 2026 (Yes Punjab News)
India’s bond market has performed strongly in recent years, both compared with its past performance and relative to most other countries, Reserve Bank of India (RBI) Deputy Governor Poonam Gupta has said.
In the RBI’s September Bulletin, Gupta noted that the assessment comes even as US bond yields have risen to their highest level in 22 years.
She attributed the relative strength of India’s bond market to the government’s fiscal commitment and expectations of sustained high economic growth, which could further improve fiscal outcomes. Credibility of monetary policy and declining structural pressures on inflation have also contributed to the performance, she said.
Gupta cited the Economist’s observation on India’s orderly bond markets that the country’s experience highlights the importance of improving public finances while allowing central banks to focus on containing inflation.
The performance of Indian equities, however, has not matched the optimism seen in the bond market, Gupta said.
“This is plausibly because of a relatively more promising AI-led story in certain other economies. While the Indian equity market witnessed an exceptional run of its own, roughly from June 2022 to September 2024, some other economies are having a better run now,” she said.
Gupta said the strength of India’s underlying real economy would eventually be reflected in equity markets. Drawing on past experience, she said it could be only a matter of time before Indian equities appear relatively more attractive again.
She also discussed India’s balance of payments (BoP) and the direction of the rupee, noting that questions are often raised about whether the balance of payments and exchange rate adequately reflect the underlying strength of the economy.
India has traditionally recorded a small current account deficit (CAD) alongside a larger capital account surplus, resulting in a net positive balance of payments, Gupta said. The CAD as a share of GDP has also declined over time, adding resilience to the external position.
“Furthermore, the CAD levels have remained far below the levels generally considered to be prudent for emerging market economies. Net services exports and remittances remain its great structural strengths,” she said.
According to Gupta, services exports and remittances are sufficiently large and resilient to absorb the merchandise trade deficit and keep the current account deficit below 1 per cent of GDP.
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