Indian bond yield eased by a basis point on September 4 after the goods and services tax council agree to a two-slab structure, slashing levy on consumer products ranging from toothpaste to small cars.
The 10-year benchmark bond yield opened at 6.533 percent after ending previous session to 6.543 percent.
The GST cuts, which kick in from September 22, coinciding with the festival season, will spur consumption at a time when US tariffs are threatening country's exports.
On September 3, the GST council, chaired by finance minister Nirmala Sitharaman with ministerial representatives from all states, approved a two-tier rate structure of 5 percent and 18 percent.
Addressing media after the meeting, Sitharaman said the changes were brought about keeping the interests of the common man and the middle class in mind. "Items on which GST has been reduced to 5 percent — hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware, and other household articles."
Money market experts said the GST cut impact has been absorbed by the traders and investors in the market soon after the initial announcement of these measures. The GST overhaul has raised the concerns of increase in government borrowing through bond market, which led to rise in bond yields in last few weeks.
Further, experts added that investors await a recalibration in duration mix in 2H bond issuance calendar to spur incremental demand.
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