Syllabus: GS-III, Subject: Economy, Topic: Trade and External sector, Issue: Emerging Markets Index
Context: Bloomberg said it will add a set of Indian government bonds to its emerging market index.
- JP Morgan previously announced it will include India’s fully accessible route (FAR) securities in its GBI-EM Global index.
Benefits of inclusion for India:
- Increased foreign investments.
- Reduction in borrowing costs.
- Potential to increase the liquidity of Indian government bonds in the local currency.
- Provides a benchmark for investors to compare the performance of Indian government bonds with other emerging markets.
| Fully Accessible Route is a separate channel allowing non-residents to invest in specified Indian government securities without investment ceilings. |
Emerging Market Local Currency Government Index:
- A specific type of stock market index that tracks the performance of government bonds issued by emerging economies.
- Denominated in their local currencies.
- Example: JPMorgan GBI-EM Global Diversified Index
