New Delhi, Nov. 3 -- Over the past few months, bond yields have spiked globally owing to concerns over rising public debt. Public debt levels in India appear reasonable compared to the developed world but they are high by emerging market standards. The spike in the global commodity cycle has raised concerns about fiscal slippages because of higher subsidy payouts. Rising inflation has raised prospects of further rate hikes.

India's benchmark 10-year central government bond yield (G-sec) has risen nearly 40 basis points (0.4 percentage points) over the past three months to reach 7.3%. Given the global context, the rise does not seem alarming. Yet, it signals growing concerns about high government spending. Corporate bond yields have also ...