What's New :
UPSC CSE Result 2023.Download toppers list

In with the World

  • Published
    23rd Sep, 2023

Context:

JP Morgan's inclusion of India in the GBI-EM index highlights India's growing appeal as an investment destination with potential benefits and challenges.

India's Inclusion in JP Morgan's GBI-EM Index

  • JP Morgan's inclusion of India: The GBI-EM index signals India's growing attractiveness as an investment destination.
  • Timeline: The inclusion process will span 10 months, potentially bringing in 45-50 billion dollars in investment over 12-15 months.
  • Significance: India's inclusion in other global bond indices like FTSE EM and Bloomberg Barclays EM depends on overcoming operational challenges.

Implications of the Inclusion

  • Impact on economic cycles: The inclusion will impact India's economic cycles and susceptibility to global capital market fluctuations.
  • Constraints in twin deficit: It can ease financing constraints on India's twin deficits, lower risk premia, and deepen bond markets, benefiting corporates and banks.
  • Dependence on government securities: India's infrastructure development can benefit from sustainable long-term financing through government securities.

Challenges

  • Future Outlook: The macroeconomic scenario remains crucial, with challenges like fiscal responsibility, rising crude oil prices, and foreign fund reliance.
  • Operational hurdles: such as international clearing and settlement, tax complexities, and repatriation of funds need addressing.
  • Ongoing reforms and market transparency: can integrate India into global markets, fostering long-term capital inflows.
You must be logged in to get greater insights.
GS Mains Classes GS Classes 2024 UPSC Study Material
X

Verifying, please be patient.

Enquire Now