रिकॉर्ड उधार योजना के बीच बेंचमार्क बॉन्ड यील्ड में वृद्धि

Benchmark bond yields are the returns an investor can expect from a specific government bond, typically the 10-year bond. They are important because they influence other interest rates in the economy, affecting borrowing costs for businesses and individuals.

When the government borrows more money, the supply of bonds in the market increases. To attract investors, the government may need to offer higher yields, leading to an increase in benchmark bond yields. This is because increased borrowing can raise concerns about the government's ability to repay the debt, leading to higher perceived risk.

The FRBM Act, 2003 aimed to bring fiscal discipline and manage government debt more effectively. It is relevant because the recent increase in government borrowing, leading to higher bond yields, highlights the challenges in maintaining fiscal discipline, especially when responding to economic crises like the COVID-19 pandemic.

Benchmark 10-year bond yields have increased recently due to the government's record borrowing plan. This plan is influenced by the need to finance fiscal deficits arising from increased spending and lower tax revenues, especially in response to events like the COVID-19 pandemic.

Increased bond yields can lead to higher interest rates on loans for consumers and businesses. This can make it more expensive to borrow money for things like mortgages, car loans, and business investments, potentially slowing down economic growth.

For the Prelims exam, focus on understanding the relationship between government borrowing, bond yields, and inflation. Understand the basic concepts and how they interrelate. Remember that increased government borrowing can lead to higher bond yields, potentially impacting inflation.