Rising bond yields abroad have implications for India: policymakers must stay alert

The lesson for India is to keep chipping away at economic reforms, enabling the ease of business and deepening of profit pools. Contrary to the West, India, given its stage of development, must act with fiscal prudence. The dangerous trend of Indian states resorting to competitive economic populism does not augur well for India’s overall fiscal position. In the longer term, economic growth, inflation and long-bond yields will determine flows into the country.