Budget 2026: New Reforms to Deepen Indias Corporate and Municipal Bond Markets
Frequently Asked Questions
The government has proposed an incentive of Rs 100 crore for any single municipal bond issuance that exceeds Rs 1,000 crore, specifically targeting large cities to encourage market-based infrastructure financing.
The framework aims to improve liquidity and price discovery by providing market makers with access to funds and derivatives, which helps narrow bid-ask spreads and ensures continuous trading.
Total Return Swaps are derivative instruments that allow investors to gain economic exposure to a corporate bond's returns without owning the physical security, aiding in risk management and broadening market participation.
The government has set a fiscal deficit target of 4.3 percent of GDP for FY27, continuing its path of fiscal consolidation while maintaining high capital expenditure.
The Budget mandates TReDS for CPSE purchases, introduces credit guarantees for invoice discounting, links GeM with TReDS, and proposes turning TReDS receivables into asset-backed securities to enhance liquidity.
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