When interest adds to deficit.

"Unlike in India, where years of lectures from multilateral institutions made economic policy makers wary of running high fiscal deficits, rich countries of the West had no such qualms." "Investors have begun treating France as the 'sick man of Europe,' with a debt-to-GDP ratio of almost 120% (in contrast with India's 80% odd)." "Consider: France's budget deficit exceeds 5% of its GDP, which is more than India's gap of 4.4% last year and this year's target of 4.3%." Mint. "France's 10-year bond yield hit the 5% mark yesterday, a new 24-year high," as "Government bond yields have risen around the world this year, in light of the surge in energy prices that has prompted central banks to respond with high interest-rate rises." "Developed market governments are also dealing with ballooning debt piles." Reuters. India's 10-year government bond yield has risen to 7.443% this morning from 7.016% on 22 September. in.investing.com. "India's central bank rejected all bids at a treasury bill auction yesterday," as "The government planned to raise Rs 230 billion through the sale of 91-day, 182-day and 364-day treasury bills." "Traders said the cutoff yields likely came in above the Reserve Bank of India's (RBI) expectations." "In the five weeks to October 14, the cutoff yields on the three maturities jumped by 64 basis points (bps), 83 bps and 69 bps respectively." Reuters. On 7 October, "India's central bank raised its benchmark repo rate by 25 bps to 5.5%, marking the first rise in nearly four years amid mounting inflation and strong economic growth." Reuters. "Will it be a case of too-little-too-late?" asked Mythili Bhusnurmath. Because nothing much has changed since the last meeting of the Monetary Policy Committee (MPC) on 26 August when it voted unanimously to "wait and see". When "India's federal government on 25 March retained its retail inflation target at 4%, within a comfort band of 2% to 6%," (Reuters) and "India's retail inflation accelerated to a higher-than-expected 5.54% in September (Reuters), why did the RBI tarry for so long? "Because, "When the government, the biggest borrower in the system, spends 40% of its revenues on interest, monetary tightening has serious consequences." "India's debt-to-GDP ratio is that of several major economies, but its interest burden relative to revenues is very high." Interest payments of the central government is at Rs 14 trillion this year. "The fiscal impact accumulates as debt matures and new borrowing becomes more expensive." "Holding rates down can be counterproductive if investors then demand greater compensation for inflation and currency risk," wrote Ajit Ranade. One result of high inflation and a reluctant RBI is the "growing household investment in gold and silver, signifying productive resources being salted away in unproductive assets." While updated numbers are not available "trade data provide some indications: gold and silver imports jumped almost 34% between 2024-25 and 2025-26. Worse, in just the first three months of the current fiscal year imports are up 37% compared to the same period last year," wrote Rajrishi Singhal. "Growing bullion savings sends another signal: households are either left with no alternative savings avenues or lack confidence in the current state of the economy." Or both. We know that "Though originally privately owned, since nationalisation in 1949, the RBI is fully owned by the Government of India." rbi.org. Clearly, the RBI's actions are designed to help the government. The question for Indians is whether it is helping the government to help the nation or just to win elections. Comparing with France is just a diversion. But it is still a lesson.