G-Sec to be included in JP Morgan Bond Index

Beginning Friday, Indian government bonds or government securities (G-secs) will be added to the JP Morgan-Emerging Market Bond Index, reducing the government's borrowing expenses.

The introduction of IGBs will be gradually implemented between June 28, 2024 and March 31, 2025, with a one percent increase in its index weight.

India is projected to hit the peak threshold of 10 percent in the GBI-EM Global Diversified, and around 8.7 percent in the GBI-EM Global Index.

This would help attract higher foreign flows as many overseas funds are mandated to track global indices.

It will also attract significant passive investments from foreign countries leading to an increase in domestic capital for industries by reducing crowding out.

During her 2020-21 Budget address, Finance Minister Nirmala Sitharaman mentioned that certain specified government securities would be fully open to non-resident investors in addition to being open to domestic investors.

Also, there won't be a lock-in requirement for the identified securities listed on the indices.

According to Vishal Goenka- co-founder of IndiaBonds.com, Index inclusion leads to an increase in the number of participants, resulting in increased market liquidity that benefits all.