New Delhi: The sharp rise in government bond yields since the Reserve Bank of India's October monetary policy review threatens to raise the government's borrowing costs and squeeze its fiscal flexibility, market experts have warned. The yield on the 10-year benchmark government bond rose to 7.474 per cent on October 23 from 7.193 per cent on October 6 — a rise of about 28 basis points (yaani 0.28 percentage points) — according to data compiled by PTI.

Source: PTI data and expert comments, via CNBC-TV18 on TradingView

Government bonds have now fallen for a tenth straight week, their longest losing streak in decades, as Brent crude hovered near $115 a barrel and traders priced in more RBI rate hikes, Reuters reported via Finimize. The RBI has lifted its repo rate to 5.5 per cent and adopted a 'calibrated tightening' stance, and ICICI Securities Primary Dealership has said the policy rate could reach 6 per cent by February, the report added.

Source: Reuters, via Finimize

Experts attributed the yield rise to elevated crude prices, a spike in global bond yields, tighter liquidity in the banking system and expectations of further RBI hikes. 'If yields remain elevated, the cost of financing the fiscal deficit will rise, adding pressure on interest expenditure and fiscal flexibility,' said V Ramachandra Reddy, head of treasury at Karur Vysya Bank, PTI reported.

Source: PTI data and expert comments, via CNBC-TV18 on TradingView

7.474%Yield on the 10-year benchmark government bond on October 23, up from 7.193% on October 6 (PTI data)
10 weeksConsecutive weekly falls in government bond prices — the longest losing streak in decades (Reuters)

Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP, said the bond market may also be pricing in a possible rate hike at the December monetary policy meeting, and that the path of yields would depend on crude prices, inflation and the RBI's next move, PTI reported. India imports close to 90 per cent of its crude oil, so sustained high oil prices lift inflation risks and the import bill at the same time, Reuters noted.

Source: PTI, via 7Globe

Higher government yields matter beyond the bond market because government securities are the reference point for pricing state borrowing and corporate bonds, so a sustained rise can push up funding costs across the economy, the reports said.

Source: Reuters, via Finimize

Sources: PTI data and expert comments via CNBC-TV18/TradingView and 7Globe, October 25, 2026; Reuters report via Finimize, October 2026.

Source: PTI data and expert comments, via CNBC-TV18 on TradingView