J P Morgan to add G-Secs to its emerging markets index from next year


PTI, Sep 22, 2023, 11:41 AM IST

Global financial firm J P Morgan has said that it plans to include Indian government bonds (IGBs) or government securities (G-Secs) into its benchmark Emerging Market index from next year, a move that will bring down borrowing cost for the government.

The inclusion of the IGBs will be staggered over a 10-month period from June 28, 2024 to March 31, 2025, indicating one per cent increment on its index weight.

”India’s weight is expected to reach the maximum weight threshold of 10 per cent in the GBI-EM Global Diversified, and approximately 8.7 per cent in the GBI-EM Global index,” J P Morgan said in a statement on Friday.

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

It will also help bring in large passive investments from overseas, as a result of which more domestic capital would be available for industry, as crowding out would be reduced.

In her Budget speech for 2020-21, Finance Minister Nirmala Sitharaman had said, ”Certain specified categories of government securities would be opened fully for non-resident investors, apart from being available to domestic investors as well.” The specified securities, which will be listed on the indices, will not have a lock-in requirement.

This was long pending and there were certain issues including with regard to taxation, which the government has ironed out in the last many months.

Some of the experts openly expressed views that the gains from inclusion of IGBs to global indices are greater than the risks.

”This JP Morgan index is USD 240 billion and India will be 10 per cent of it, which means USD 24 billion. This will reset the base rate for India and the yield should come down sharply. India’s cost of borrowing will come down,” said AUM Capital National Head-Wealth Mukesh Kochar.

Since Covid, the fiscal deficit in India has remained elevated due to higher borrowing, he said, adding this event will ease borrowing pressure as a large part of the borrowing will be observed by this route and banks’ Treasury will be flushed with mark-to-market gains.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Omar Abdullah sworn in as J-K CM

Nick Jonas rushes off stage after laser incident at Prague concert, video goes viral

1st Test: Rain washes out opening session at Bengaluru

Bengaluru rains: Govt will manage the situation, says Deputy CM Shivakumar

Railway cancels some trains due to waterlogging over tracks

Disaster response force personnel deployed in Bengaluru following heavy rain forecast

Bahraich riots: ADGP Law & Order Amitabh Yash chases away violent mob

Related Articles More

Markets fall in early trade amid foreign fund outflows

Consumer Affairs Minister slams air purifier firms for false claims ahead of pollution season

RBI Governor pitches for reducing cost, time of remittances

Over 1.55 lakh candidates register for PM Internship Scheme

Govt imposes import curbs on parts of pocket lighters; to reduce dependence on China

MUST WATCH

Banduru sheep breeding

Ratan Tata | Reliance

Screen time

Vipra Chat Home

Tirupati Laddu Controversy


Latest Additions

Omar Abdullah sworn in as J-K CM

Nick Jonas rushes off stage after laser incident at Prague concert, video goes viral

1st Test: Rain washes out opening session at Bengaluru

Assembly by-polls: Cong in Karnataka to send candidates’ list to high command in 2-3 days

Bengaluru: Businessman loses Rs 1.5 crore to online investment scam

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.