Sanjeev Sanyal, Member of the Economic Advisory Council to the Prime Minister of India, spoke to Moneycontrol about the benefits of India being included in the EM Global Bond Index and drivers for GDP growth in India.

Edited excerpts from the interview:

What are the immediate and long–term benefits of India getting included in the JP Morgan Global Bond Index?

This has been in the works since 2019 and is an important part of the evolution of the internationalisation of our financial system. In terms of benefits, right off the bat, we got a weightage of up to 10 percent, which accounts for around $ 24 billion. Also, once you're in one index, you typically end up in other indices as well. Once it's all done and dusted, we may get around $40 billion or even more over the next couple of years. This inflow is useful because it tends to be more stable. We need to remember that these are passive funds that are based on a certain weightage. JP Morgan itself is quite big, but there are others like FTSE and Barclays-Bloomberg. Once you are in there, it means that there is a relatively stable pool of money that we have access to. It's not 100 percent stable. If we don't manage our macro stability, then, of course, this will whittle away. But by and large, it tends not to get thrown off too much by global storms of any kind. The second impact is that it makes it cheaper for the Indian government specifically, and more importantly, the economy in general, to access money. In that sense, it makes bond yields in India lower than they would have otherwise been.