ANJALI KUMARI
Mumbai, 16 February
Foreign portfolio invesFtors’ (FPIs’) holding of
Indian debt is expected
tobe around 4 per cent of total
outstanding after the inclusion
of Indian government bonds
into JP Morgan’s widely
tracked emerging market government bond index, and this
expansion provides ample
headroom, suggesting minimal volatility following the
induction, said Ashima Goyal,
an external member
of the Reserve Bank of India’s
(RBI) Monetary Policy
Committee (MPC). She expects
around $30 billion inflows on
the back of the inclusion.
“Indonesia allowed local
currency bonds owing to the
push from international institutions, saying that a lot of
money wanted to come into
emerging markets and local
currency bonds, and you won’t
have any currency risk. The
share of foreign money in the
(Indonesian) bond market
went up to40 per cent. India is
at 4 per cent (expected),” she
said, while speaking at
IIM Kozhikode’s conference on
macroeconomics, banking,
and finance in Mumbai.
“This gives ample headroom
and there shouldn’t be any
major volatility.”
Goyal, who is also a professor at the Indira Gandhi
The headline inflation
rate is expected
to decline to core
inflation levels shortly,
Goyal said
Institute of Development
Research in Mumbai, further
said thatIndia’s headline inflation rate is expected to decline
to core inflation levels shortly.
“Research suggests that in
the current situation, it is core
which is steadier and that
affects inflation expectations
and headline comes down to
core. So, we should see this
happen soon,” she said.
In January, the Consumer
Price Index (CPI)-based retail
inflation dipped to a threemonth low, standing at 5.1 per
cent compared to 5.69 per cent
in December.
Food price inflation
decreased to 8.30 per cent from
9.53 per cent in December.
Furthermore, core inflation,
excluding food and fuel, eased
to 3.6 per cent in January,
down from 3.9 per cent in
December 2023, marking the
lowest figure since November
2019.
Goyal also discussed the
perception of changes in the
government’s finances.
She referred to recent
statements from the
International Monetary Fund,
indicating that the debt-toGDP ratio was projected to rise
beyond 100 per cent. While
acknowledging similar trends
in the US, she noted that in
India, there was a decrease in
deficit ratios due to higher
growth, suggesting an
expected reduction in these
ratios. Goyal also pointed out
that India’s debt ratio was
higher compared to East Asia,
attributing this partly to the
historical absence of countercyclical ~measures. She
observed that the current government appeared to adopt a
conservative approach.
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