Not macro or micro, we have muddled economics.

"Successive monetary policy rate cuts may have relaxed short-term bond yields, but the long-term yields have surged, widening the term premium," wrote Surbhi Bhatia. Since yields are the interest the government pays on its bonds, "Interest payments have gone up in recent years, and now account for more than 90% of the fiscal deficit." "Prior to RBI (Reserve Bank) resorting to 'Operation Twist' measures in December 2019, the term premium reached 129 bps (basis points), the highest on record since the global financial crisis." "Operation Twist first came about in 1961 when the Federal Open Market Committee (FOMC) sought to strengthen the US dollar and stimulate inflows of cash into the economy." Normally, yields on long-term bonds are higher than on short-term ones. By selling long-term bonds, while buying short-term ones, the central bank twists long-term yields downwards. The RBI conducted its own version of Operation Twist through open market operations (OMO) because, "The RBI slashed key interest rate - repo rate - by 135 basis points to 5.15 percent but banks passed on only a part of it." The lending rate declined by only 49 bps. "The benchmark 10-year government bond yield has dropped to 6.5%, nearly 100 basis points lower than a year ago," wrote Aparna Iyer. This despite the fiscal deficit expected to rise to 3.8% of GDP compared to 3.4% last year. So, the borrowing cost of the government is falling even as it is borrowing more. This does not increase investments because private companies cannot borrow at these rates. The RBI may have twisted the yield curve for the government, "But nothing prepared it and bond investors for the rude shock of inflation," wrote Iyer. Retail inflation for December came in at 7.35%, which led to a rise of 10 basis points on 10-year bonds before settling down to 6 points higher. "Companies must repay an unprecedented 5.9 trillion rupees ($83 billion) of local notes this year, just as corporate defaults spike," wrote Divya Patil. "India's public debt also appears worrying when compared with other emerging economies," and "fiscal deficit levels are among the worst, even without accounting for delayed government payments that have kept the fiscal deficit figures lower than what they otherwise would have been." Faced with a revenue shortfall of Rs 2.5 trillion, "The government is likely to reduce spending for the current fiscal year by as much as Rs 2 lakh crore ($27.82 billion) as it faces one of the biggest tax shortfalls in recent years, three government sources said." What was the point of Operation Twist to bring down borrowing cost if the government dare not borrow any more? Copy the Americans and keep your fingers crossed. Marvelous.