Inclusion of Indian bonds in JP Morgan index to widen investor base, may boost rupee: What do the experts say?

Global financial firm JP Morgan has said that it plans to include Indian government bonds or government securities (G-Secs) into its benchmark emerging market index from June, 2024, a move that will bring down borrowing costs for the government.

Chief Economic Advisor V Anantha Nageswaran said that there is no need to assume there would be increased volatility in the currency market due to the index inclusion. He also said there is potential for currency appreciation following the inclusion of Indian bonds in JPMorgan index.

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

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.