economy | IST

Allowing retail investors to come into G-sec market is 'revolutionary', says DBS’ Taimur Baig

The Reserve Bank of India (RBI) on Friday projected a GDP growth rate of 10.5 percent for the financial year beginning April 1, on the back of a recovery in economic activities. Retail investors can now access primary, secondary government bond markets. The governor has given everything that economists and bond dealers were expecting ahead of the policy. The MPC stance is accommodative, the liquidity stance also remains accommodative. 

The Reserve Bank of India (RBI) on Friday projected a GDP growth rate of 10.5 percent for the financial year beginning April 1, on the back of a recovery in economic activities. Retail investors can now access primary, secondary government bond markets. The governor has given everything that economists and bond dealers were expecting ahead of the policy. The MPC stance is accommodative, the liquidity stance also remains accommodative.
While giving his take on MPC policy, Taimur Baig, MD & Chief Economist at DBS Grp Research said, “Dovish as expected, but I think that the announcements related to retail investors being able to set up an account directly with the RBI is almost revolutionary. So this is a huge measure, this is allowing a regular person to access the window directly through RBI and it is not just a question of financing the government deficit it is the digital angle that how this will set up an account have access directly to the central bank. It is an issue that global central bankers are grappling with, India takes a giant step.”
Abheek Barua, Chief Economist at HDFC Bank said, “As expected the focus of the policy was on managing the government borrowing program. We have got a very large borrowing program, an unanticipatedly large borrowing program. So perhaps that is why perhaps yields have moved up.”
He added, “The retail participation is a big deal but I think we need to educate retail investors considerably about the vagaries of the government bond market because otherwise they might be taken by surprise.”
Ananth Narayan, Professor at SPJIMR said, “Governor Das was walking a tight program, he was conveying that growth is coming back to normalcy, he was conveying the risk on inflation and he was doing it in a very subtle manner, at the same time he was taking pains to tell the market I will ensure everything happens smoothly and these are difficult balance to achieve.”
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