Descriptive Prep: Brajesh Mohan

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India’s biggest school board is preparing for a digital shift that could change how Class 12 results are evaluated. From the 2026 board exams, CBSE will move to on-screen marking, where scanned answer sheets will be evaluated digitally instead of physically. The goal is simple: faster results, fewer calculation errors, and more transparent assessment. Teachers will be able to check answer scripts from their own schools using a secure portal, while marks will be recorded automatically to avoid totalling mistakes.

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What is bond and bond yield curve and it's relation with monetary policy transmission? Bond yield = how much income your bond investment gives you each year. Suppose the Government of India issues a bond: Face value: ₹1,000 Coupon rate: 7% Annual interest (coupon): ₹70 If you buy this bond at ₹1,000: You invest ₹1,000 You get ₹70 every year Yield = 7% Government bonds are traded in the market. Their price keeps changing. Case 1: Bond price falls You buy the same bond at ₹900: Annual interest as promised by govt = ₹70 Investment = ₹900 Yield = 70 / 900 ≈ 7.8% Price ↓ → Yield ↑ Case 2: Bond price rises You buy the bond at ₹1,100: Annual interest = ₹70 (Fixed) Investment = ₹1,100 Yield = 70 / 1,100 ≈ 6.36% Price ↑ → Yield ↓ Bond prices and bond yields move in opposite directions. A bond yield curve shows: Interest rates (yields) for bonds of different maturities at one point in time. Let's suppose 1 year G-Sec = 6.5% 5 year G-Sec = 6.8% 10 year G-Sec = 7.1% 30 year G-Sec = 7.4% When plotted this line is called the yield curve There are different shapes of Yield Curve Normal Yield Curve (Upward sloping) Flat Yield Curve Inverted Yield Curve Policy rate change leads to Bond yields move

The Article discusses the paradox of rising government borrowing costs in India despite the Reserve Bank of India (RBI) cutting the benchmark repo rate. The RBI has cut the repo rate by 125 basis points (1.25%) over the last year (from 6.5% to 5.25%). Contrary to the rate cut, the borrowing costs (yields) for both Central and State government securities have increased. Key Driver: 1.Debt-to-GDP Ratios: * Centre: Peaked at 60.7% (2020-21); currently around 55.2%, States: Consolidated debt is at approximately 29.2%. 2.FRBM Act Targets: The 2018 amendment to the Fiscal Responsibility and Budget Management (FRBM) Act set targets of 40% for the Centre and 20% for States. Current levels remain significantly higher than these mandates. Key drivers behind this: 1.Crowding Out: High government borrowing in a tight liquidity environment "crowds out" the private sector, forcing interest rates up. 2.Foreign Portfolio Investors (FPIs): Significant outflows (selling of Indian stocks/bonds) have drained dollars from the market. 3.RBI Intervention: To prevent the Rupee from depreciating due to FPI outflows, the RBI sells dollars. This action simultaneously sucks Rupee liquidity out of the banking system, further tightening the market. Article link 🔗 https://indianexpress.com/article/explained/explained-economics/why-borrowings-have-now-begun-biting-govts-10521523/

The Article discusses the paradox of rising government borrowing costs in India despite the Reserve Bank of India (RBI) cutting the benchmark repo rate. The RBI has cut the repo rate by 125 basis points (1.25%) over the last year (from 6.5% to 5.25%). Contrary to the rate cut, the borrowing costs (yields) for both Central and State government securities have increased. Key Driver: 1.Debt-to-GDP Ratios: * Centre: Peaked at 60.7% (2020-21); currently around 55.2%, States: Consolidated debt is at approximately 29.2%. 2.FRBM Act Targets: The 2018 amendment to the Fiscal Responsibility and Budget Management (FRBM) Act set targets of 40% for the Centre and 20% for States. Current levels remain significantly higher than these mandates. Key drivers behind this: 1.Crowding Out: High government borrowing in a tight liquidity environment "crowds out" the private sector, forcing interest rates up. 2.Foreign Portfolio Investors (FPIs): Significant outflows (selling of Indian stocks/bonds) have drained dollars from the market. 3.RBI Intervention: To prevent the Rupee from depreciating due to FPI outflows, the RBI sells dollars. This action simultaneously sucks Rupee liquidity out of the banking system, further tightening the market. Article link 🔗 https://indianexpress.com/article/explained/explained-economics/why-borrowings-have-now-begun-biting-govts-10521523/

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