We will enter global bond club with our dhotis and sarees: Finance Secretary

Finance Secretary TV Somanathan

India will "not bend over backwards" to get included in the global bond index, Finance Secretary TV Somanathan said on February 4 in Mumbai, reiterating the government's stance that domestic policies won't be changed to suit foreign investors.

Bond settlement rules, tax complexities and the way in which investors repatriate their money are believed to be the hurdles in the way of India's inclusion.

“Inclusion in global bond indices has some obvious positives and negatives. There will be increased volatility and increased vulnerability to the decisions taken abroad that have no connection to the domestic economy,” Somanathan while addressing members of the industry & trade, tax practitioners and MSMEs in a post-budget event.

“So, we have to keep the balance on positives and negatives in mind,” he added.

Also Read: India’s bonds will have to wait longer for global index inclusion

A Balasubramanian of Aditya Birla Sun Life AMC posed the question on India’s inclusion in the global bond index to the panel, which included Union Finance Minister Nirmala Sitharaman and her team.

“Some clubs and gymkhanas in Bombay have dress code like ties and formals. But, let me make it clear that if India has to enter the global bond club, it will enter with its dhotis and sarees,” Somanathan said.

India’s policies are made keeping India in mind and will not be changed to suit foreign investors.“Policy decisions will be taken based on India’s needs. If that is acceptable to them, they can let us in. We will not bend over backwards to make any policy changes,” he added.

Foreign brokerage Morgan Stanley believes if India is included in the global bond indices, it can result in nearly $20 billion of inflows over the subsequent 12 months. If it happens, the brokerage firm sees the Sensex at 80,000 by December 2023.