The decision on Feb. 1 triggered the biggest drop in the benchmark 10-year bond yields in over two months. Bonds have since pared their gains, with the budget math increasingly looking daunting.
India last week proposed a lower-than-expected market borrowing program, as part of a plan that sought to bridge its budget deficit by boosting reliance on the nation’s small savings pool.
India's central-bank watchers agree that interest rates will be raised to pre-pandemic levels on Friday, yet they are split on the size of the increase aimed at fighting inflation and propping up a weak currency.
The Reserve Bank of India is expected to aggressively tighten policy in the next meeting after minutes of its off-cycle policy review earlier this month revealed that rate setters pitched for front loading hikes amid a worsening inflation outlook.