India is bracing itself for potential influxes of 'hot money' following its recent inclusion in a widely-tracked bond index, according to a senior official. The move by JP Morgan to include Indian government bonds in its Government Bond Index-Emerging Markets (GBI-EM) has sparked concerns about potential challenges as well as opportunities for the country's financial markets.
This recent development may signal an increased inflow of foreign capital into India's bond market, as the country is now classified as an investment-grade nation by JP Morgan's index. The inclusion, effective from April 1, 2021, has put India in the spotlight, making it more attractive to global investors seeking diversification and higher returns.
