India may not experience a rise in its natural interest rate similar to the United States despite increasing global bond yields, according to a study by SBI Capital Markets. Stable economic growth, anchored inflation expectations, gradual fiscal consolidation, an improving credit profile and recovering household savings are expected to support India's interest rate stability. However, narrowing India-US bond yield differences could make foreign capital inflows less reliable for financing the country's current account deficit. The report recommends boosting exports, attracting foreign equity investments and maintaining adequate foreign exchange reserves to strengthen external financial stability.
