The borrowing cost for Indian states has increased by 10 basis points to 7.56% at the first weekly debt auction of the third quarter. This is the highest rate in the past 23 weeks. Despite a decline in the average tenor to 13 years, the weighted average cost has risen. Additionally, the spread between the cut-off of 10-year state bonds and the new 10-year G-Secs yield has also increased slightly.
India is one of the largest importers of the commodity. Inflation eased to 6.83% in August from 7.44% in July but remained above the central bank s target band for second consecutive month.