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      Question

      What was one significant impact of the S&P sovereign

      rating upgrade on India’s financial markets, as per the RBI report?
      A Increase in trade deficit Correct Answer Incorrect Answer
      B Permanent reduction in GST rates Correct Answer Incorrect Answer
      C Fall in bond yields Correct Answer Incorrect Answer
      D Rise in repo rate Correct Answer Incorrect Answer
      E Decline in monsoon coverage Correct Answer Incorrect Answer

      Solution

      The RBI’s State of the Economy report noted that the S&P sovereign rating upgrade to BBB (long-term) and A-2 (short-term) increased investor confidence, contributing to a fall in bond yields. Lower yields reflect improved borrowing conditions, as ratings influence perceived credit risk. However, yields later hardened again due to concerns over India–US trade frictions and GST rate adjustments.

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