Bond markets ignore RBI's G-Sap largesse on rising inflation; yields soar

Doubts cast about G-Sap effectiveness at a the time when the Covid-19 surge is threatening to halt economic revival in the country

Bond yields shot up more than 10 basis points after the first auction under the much-publicised G-sec Acquisition Programme (G-SAP 1.0), casting doubts about its effectiveness at a the time when the pandemic upsurge is threatening to halt economic revival in the country.

The G-SAP, on the contrary, was supposed to keep liquidity in the markets. The RBI is committed to pouring in Rs 1 trillion in the first quarter in the hope that “bond vigilantes”, a term used by the RBI in its bulletin, will remain calm.

The first auction of Rs 25,000 crore was on Thursday.

“GSAP is no guarantee for