Rising global bond yields threaten emerging markets, says India’s economic affairs secretary

At the Kautilya Economic Conclave organized by the Ministry of Finance, Economic Affairs Secretary Anuradha Thakur said that the surge in global bond yields poses a "huge challenge" for emerging markets. She linked the rise to extensive government borrowing and a booming AI investment cycle that is increasing demand for debt financing. With U.S. Treasury yields at 5.34% and Japanese ten-year yields at their highest since 1996, investors are demanding higher compensation for inflation, fiscal uncertainty and duration risk.

Thakur highlighted India’s declining fiscal deficit, sound banking system and robust foreign exchange reserves as foundations for maintaining investor confidence. She also cited record foreign direct investment inflows of $97 billion in FY26 and $29.3 billion in the first quarter of FY27 as evidence of growing global confidence in India’s economic fundamentals.