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Podcast: Moneylife News Bites
Episode: Market Caught in a Fiscal Tug of War between RBI and The States
Description: India’s markets are stuck in an unusual bind. Even as the Reserve Bank of India cuts rates and injects massive liquidity, bond yields remain stubbornly high and equity markets refuse to rally. What’s going wrong?In this audio, Debashis Basu explains how a surge in state government borrowing is undermining the RBI’s easy-money policy. While the central bank is pumping liquidity through bond purchases and swaps, states are flooding the debt market with their own bond issuances—absorbing that liquidity and pushing yields higher. Weak state revenues, rigid spending commitments, and rising competitive populism...