homemarket NewsInclusion of bonds in JPMorgan EM index will bring down cost of capital for India, says Sanjeev Sanyal
Inclusion of bonds in JPMorgan EM index will bring down cost of capital for India, says Sanjeev Sanyal
Sanjeev Sanyal stated that the inclusion of Indian bonds in the JPMorgan EM index will have a profound impact on the country's economy. It is estimated that this inclusion will bring about approximately $24 billion worth of inflows into India.
JPMorgan Chase & Co. has announced that it will include Indian government bonds (IGBs) in its benchmark Emerging Market index, marking a pivotal moment in India's journey towards becoming an integral part of the global economy.
Sanjeev Sanyal, a Member of the Economic Advisory Council (EAC) to the Prime Minister, hailed this development as a momentous step forward. He emphasised, "The inclusion of Indian bonds in the JPMorgan EM index is one more form of inflow and access to capital that we have. In the long run, it positions India as part of the global economy, it lowers the cost of capital in India both for the government and overall as well. So, in that sense, the inclusion is good for bringing down the cost of capital in India."
The journey toward this historic inclusion will begin on June 28, 2024, with JPMorgan gradually integrating IGBs into its benchmark index over a span of ten months, culminating on March 31, 2025. During this period, the weightage of IGBs in the index will increase by one percent each month. According to JPMorgan, India is expected to reach a maximum weight of 10 percent in the Global Diversified index (GBI-EM GD).
Sanyal stated that the inclusion of Indian bonds in the JPMorgan EM index will have a profound impact on the country's economy. It is estimated that this inclusion will bring about approximately $24 billion worth of inflows into India. However, Sanyal highlighted that this is not the only index; there are several other indices like the Barclays, FTSE, etc. So, over time, if this becomes generalised and we become a normalised part of the global indices, then this can account for as much as $40 billion worth of inflows, Sanyal added.
(Edited by : Sangam Singh)
First Published: Sept 22, 2023 4:25 PM IST
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