Prime Minister Narendra Modi announced a record $187 billion bond sale for the fiscal year starting April 1, 2026. Finance Minister Nirmala Sitharaman said the government will borrow 17.2 trillion rupees, up 16 % from the previous year. The move follows a 16.5 trillion rupee estimate from Bloomberg.

India’s 10‑year bond yield climbed to 6.73 %, the highest since March 2025, as state governments issue more debt and pension funds pull back. With the RBI’s limited room to cut rates, higher yields could raise borrowing costs for a growth‑strapped economy facing steep U.S. tariffs.

Net borrowing is projected at 11.7 trillion rupees, nearly matching last year’s 11.5 trillion. The RBI has stepped up bond purchases to inject liquidity, but its upcoming policy review on Feb. 6 may signal a tightening stance. Investors will watch how the central bank balances growth and inflation.

Analysts warn that a surge in government borrowing could push sovereign yields higher, squeezing pension and insurance funds that rely on stable returns. If yields rise above 6.8 %, the cost of future infrastructure projects may climb, potentially slowing the government’s planned spending boost and reform agenda.