India has veritable plans to achieve a US$ 7-8 trillion economy within the next five years, and as per the recent scenario it has become apparent that the significant portion of the capital formation is expected to be driven ahead by the expanding Bond markets. The overall value of the bonds has reached a collective $2.69 trillion, as per reports that have been published online. Data compiled by India Bonds.com, sourced from CCIL and SEBI, reveal that the Indian Bond Market Stood at US$2.69 trillion at the end of December 2024, along with the corporate Bond Market surpassing US$602 billion.
The momentum in the corporate bonds segment has been outpacing other segments, showcasing a titular shift towards debt- driven financing as the go to choice for Indians to scale up operations.
New Trends
The trend has showcased similar fervor for quite some time , even in the first nine months of FY 2024-25, the total stock of outstanding bonds grew by US$ 100 billion, factoring in a 2.7% depreciation of the Indian Rupee. Beyond this the Corporate bond market saw a resolute growth of around 9%.
Even after such relentless growth patterns the Indian Bond market still lags behind Global peers standing at 0.65x the equity market capitalization, compared to 1.2-2.0x in developed economies.
Volatile Market, A Possible Reason Behind The Increase
One of the primary reasons has also been the recent volatile shake up of the Equity market, Investors have sought bonds to diversify their investments portfolios to reduce the chances of sudden declines.
Corporate Bonds are expected to play a profound role in the overall pursuit of India to reach a multi trillion dollar goal. Such bonds could easily be the titular mode of financing for infrastructural, Industrial growth and Long term Economic stability. Investors as well as policy makers would be keenly vigilant of the evolving framework to be able to bear a more liquid and flexible market in the years ahead.
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