RBI Policy, Liquidity, and Borrowing Influence India's Debt Market Dynamics

India's debt market is experiencing complex dynamics as short-term interest rates have declined following RBI's rate cuts, while long-term government bond yields remain elevated amid high borrowing and revenue concerns. State government borrowing costs have risen sharply, matching AAA corporate rates. The RBI's recent policy pause, active liquidity management, and regulatory changes are influencing bond yields, with liquidity conditions expected to normalize in the upcoming fiscal year, impacting market behavior across the yield curve.