RBI's rescue act

But bond market remains jittery as capital outflows hit a high

At the moment, few things seem capable of dissipating the gloom that has descended on India’s bond markets. In its latest effort to cheer up the market, the Reserve Bank of India has announced that it will buy bonds worth Rs 100 billion on May 17, in order to meet “durable liquidity needs going forward”. The RBI’s motivations are understandable; the benchmark yield on government debt has shot up in the past year, and is now touching a very dangerous 7.8 per cent — it was 6.35 per cent at the time of demonetisation in November 2016. Since then, a