RBI’s Battle to Contain Yields Gets Tougher on Modi Budget Spree

Even after the Reserve Bank of India cut rates more than 1 percentage point and pumped record amounts of cash into the economy, investors are refusing to push down bond yields. As the RBI readies another policy decision this week, they’re keen to see how Governor Sanjay Malhotra tackles the challenge.

The federal budget rolled out Sunday only made things trickier for Malhotra. In it, the government unveiled a record debt-sale plan that exceeded analysts’ expectations, adding to a wave of bond offerings from states that are overwhelming the tepid demand seen from pension and insurance funds.