The Indian bond market is making its voice heard. On Monday, the government announced that in the next financial year, it will borrow less from the market than what was anticipated. It also decided not to front-load bond issuances in the first half of the fiscal as was being done for several years. Consequently, the yield on the benchmark 10-year government bond fell by over 25 basis points.

However, this is not the first time that the government has acted according to the wishes of the bond market. Earlier in the financial year, the bond market reacted sharply to the government’s announcement that it would need to borrow Rs50,000 crore more and forced it to lower the target.

Meanwhile, the fall in bond yields should help the banking sector, which was suffering because of the rise in yields. The government has, perhaps, done the best it could for the bond market in the present situation. Bond prices from here on are likely to be driven by factors such as interest rates in global markets and the inflation trajectory in the Indian economy.