10Year Yield Outlook
New Delhi
Government bond yields in India are expected to move slightly lower in the coming months as inflation cools, fiscal conditions improve, and crude oil prices soften, according to a report released on Monday.
Crisil Intelligence said the benchmark 10-year government bond yield is likely to trade in the range of 6.38 to 6.48 percent by February 28, 2026. The yield is currently hovering around 6.54 percent, indicating limited but steady downward movement.
The report also noted that yields on state development loans may decline from the present level of around 7.15 percent to a range of 6.98 to 7.08 percent by the end of February. Similarly, 10-year corporate bond yields are expected to fall into the same range, supported by stable economic conditions.
Crisil said the Reserve Bank of India still has room for a rate cut due to benign inflation, but it is likely to follow a data-driven approach amid global uncertainties. Domestic demand is expected to remain the main driver of growth, helped by lower inflation, GST rationalisation, and income tax relief measures.
The agency forecast India’s GDP growth at 7 percent in the current fiscal year, higher than 6.5 percent recorded in the previous year. Consumer price inflation is expected to soften further to around 2.5 percent in FY26.
Food inflation is likely to remain under control due to a sharper-than-expected fall in prices, strong agricultural output, moderate global crude prices, and the benefits of GST rate cuts.
On the fiscal front, the Union Budget aims to reduce the Centre’s fiscal deficit to 4.4 percent of GDP in FY26 from 4.8 percent in FY25, strengthening investor confidence.
Crisil expects crude oil prices to average between $60 and $65 per barrel in 2026. However, bond yields may still be influenced by factors such as global developments, foreign investor flows, currency movements, and government borrowing plans in the near term.
