The Inflation Index Bonds__:
1. Always provide returns in excess of inflation
2. Give an estimate of inflation expectations
3. Have potential to turn Gold investments into financial investments
Choose the correct option from the codes given below:
Return on savings of people in financial instruments is eroded by the Inflation; that is the reason of launching Inflation indexed bonds. Inflation indexed bonds provide returns that are always in excess of inflation, ensuring that price rise does not erode the value of savings. This means that there are two potential outcomes, one – restoring households’ faith in financial instruments and two – rein in our appetite for gold. India’s Budget 2013-14 had announced launch of Inflation Indexed Bond. It is not for the first time that the government has introduced these bonds. In 1997, India had also introduced a variant of inflation-indexed bond. But the design was faulty. Only the capital was indexed to inflation, not the periodic interest payments.
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