Archive · 7 Sep 2026
GDP Growth Takes Back Seat as India Faces Foreign-Inflow Concerns
Sandeep Yadav says markets care less about GDP growth right now.
He says inflation, government finances, wars and oil prices matter more.
The latest 7.8% growth figure covers April-June and may already be outdated.
He expects the Reserve Bank of India could raise rates in December or February, with February more likely.
Higher rates could make borrowing more expensive.
Yadav worries India may have trouble attracting foreign money.
Some foreign-currency deposits and forward contracts will need to be handled later.
He says foreign investors may still bring passive money when India joins bond indexes, but strong active interest has been weak.
Sandeep Yadav says GDP growth ranks below inflation, fiscal conditions, geopolitics and oil prices for debt markets.
He describes the 7.8% April-June growth figure as stale because subsequent geopolitical and commodity developments have changed conditions.
Yadav expects the Reserve Bank of India’s first rate hike after its long pause in December or February, with February more likely.
He warns that Foreign Currency Non-Resident (Bank) deposits and foreign-exchange forward maturities could pressure India’s future external financing.
Yadav says passive bond-index inflows may continue, but active structural foreign investment in Indian government debt remains weak.
- Who
- Sandeep Yadav, Head of Fixed Income at DSP Mutual Fund, discussed India’s economic and foreign-investment outlook.
- What
- Yadav said GDP growth has a low priority in markets’ current indicator ranking and warned about future foreign-inflow pressures.
- When
- The discussion concerns the April-June GDP data, projected rate decisions in December or February, and FCNR(B) deposit repayments due after three to five years, including obligations extending to 2029.
- Where
- India, particularly its debt market, government-bond market and foreign-exchange markets.
- Why
- Yadav said inflation, fiscal pressures, geopolitics, oil prices and expected foreign-exchange outflows are currently more consequential than the latest GDP growth figure.
- April-June GDP growth
- 7.8%, according to the article
- Most important market concerns
- Inflation, government finances, geopolitics, war-related oil prices and fiscal pressures
- Rate-hike expectation
- Yadav assigns a 60% chance to February and 40% to December
- FCNR(B) deposits
- The article says they total about $130 billion and must be repaid after three to five years
- Foreign-exchange forward book
- Yadav cites a short forward book of $200 billion
- Foreign-exchange reserves
- Yadav says reserves could be close to $800 billion by the relevant period
- Potential index-related inflows
- Yadav expects $20 billion-$25 billion from additional global bond-index inclusion