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India’s path to becoming a $7–8 trillion economy within the next five years may hinge on one key driver – its growing bond market, analysts at IndiaBonds.com suggest.
With current valuations reaching $2.69 trillion, the bond market will likely play a central role in capital formation.
As per data compiled from the Clearing Corporation of India (CCIL) and the Securities and Exchange Board of India (SEBI), the Indian bond market stood at $2.69 trillion as of December 2024.
Notably, corporate bonds contributed over $602 billion to this total.
Corporate bond growth has outpaced other segments, indicating a rising preference for debt-based funding as companies expand operations and scale business activities.
In the first nine months of FY 2024–25 alone, the bond market added $100 billion in value—even after accounting for a 2.7% depreciation in the rupee.
Measured in Indian currency, the overall market expanded by 6.5%, with corporate bonds registering a higher growth rate of 9%.
Bond Market Still Lags Global Standards
Despite this uptick, India’s bond market however remains underdeveloped when compared to global standards.
It currently represents just 0.65 times the size of the equity market, whereas developed economies typically show a ratio between 1.2 and 2.0.
Recent equity market fluctuations have pushed investors to seek greater portfolio stability, leading to increased interest in fixed-income instruments.
IndiaBonds.com analysts however believe this rising demand is a strong signal that bonds will be a key funding channel for India’s ambitious growth agenda.
As India accelerates its push for infrastructure development and industrial growth, corporate bonds will likely emerge as a crucial financing tool.
Observers are now focused on how policy and regulatory changes will shape the future of India’s debt markets, ensuring they remain deep, stable, and accessible.
((Disclaimer: The views and insights shared by experts are their own and do not reflect the position of Bharat Express))
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