When does India propose to go ahead with the $10 billion sovereign bond issue that it had promised in the Union Budget in July?

Not too much progress seems to have been made at this point of time. At least, that is what even the Finance Minister has admitted to the press. In fact, the FM had been quite enthusiastic about the issue of sovereign bonds for the first time by an Indian government. However, there have been objections from the PMO considering the currency risk that is implicit in such bonds. Some economists have even projected a scenario where a sharp weakness in the rupee may compromise not only the INR but also India’s external ratings. In the last few weeks, the rupee has displayed lot of weakness due to oil prices, negative FPI flows and the likelihood of a global slowdown. The Chinese Yuan has also queered the pitch. Considering these facts, the sovereign bond looks very unlikely at this point of time. Indian government may consider this bond issue at a later when the rupee and the world economy stabilize.