- Neelkanth Mishra noted visible strains in global markets due to rising fuel prices and bond yields
- He emphasized that higher bond yields have led to increased borrowing costs impacting financial conditions
- Mishra observed the mortgage market is already affected by tighter financial conditions and rising rates
Neelkanth Mishra, UIDAI Chairperson and World Bank Executive Director, said strains in global markets were already visible, pointing to higher fuel prices, slower global fuel-demand growth and a sharp rise in bond yields that have tightened financial conditions.
"The stress in the global markets is already visible," Mishra said, pointing to the rise in fuel prices and a slowdown in the growth of global fuel demand.
ALSO READ | RBI Committed To Remain Vigilant Of Emerging Vulnerabilities, Keep Financial System Resilient: Guv
He pointed to a broader tightening in financial conditions, with the sharp rise in bond yields increasingly translating into higher borrowing costs.
“The bond yields have gone up so substantially that it is already pinching,” Mishra said, adding that the impact of tighter financial conditions was already being felt rather than being a risk that could emerge only in the future.
The impact, he said, is already being felt in the mortgage market, with mortgage rates and new mortgage issuance responding to tighter financial conditions.
Mishra also highlighted the relationship between global and domestic interest rates, saying he did not consider the linkage between global rates and Indian rates to be appropriate.
According to him, India's fiscal position is different from that of several developed economies, where he said fiscal laxity has been more pronounced.
“The fiscal laxity that we are seeing in developed markets is not something that we have seen here,” Mishra said.
ALSO READ | RBI Rate Hike Ahead? SBI Research Flags Inflation, Rupee Risks For October MPC
Despite the various pressures this year, he noted that the Indian government has remained committed to its fiscal deficit targets.
At the same time, Mishra struck a more positive note on India's domestic growth prospects.
He said credit growth had revived and economic activity was improving, with growth finally beginning to move above the economy's trend rate.
“Now that credit growth has revived, the economy is doing well; it is finally starting to go above our trend,” Mishra said.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.