Inflation index bonds UPSC is an essential current topic in India. The UPSC aspirants must work on grabbing an excellent hold on the recent topics in the nation. Get the knowledge about the difference between IIBs and other Bank Deposits. You can fetch the overall summary of the topic for your UPSC exam preparation.

Also Read: Article 142 UPSC: Check Out the Complete Guide for UPSC CSE Exam!

Salient Features of Inflation Index Bonds

The inflation index bonds UPSC is important for the UPSC candidates to understand and grab because multiple questions are asked about the current happenings in the UPSC exam. Inflation Index Bonds (IIBs) are an increased version of Capital Indexed Bonds (CIBs) that were issued throughout 1997.

Whereas CIBs protected inflation just for the principal quantity, IIBs offer protection for the interest furthermore. The salient features of IIBs are as follows. IIBs have a set real coupon rate, but a nominal principal price that’s adjusted against inflation. Periodic coupon payments are created on the adjusted principal. In this manner, these bonds can offer inflation protection to each principal and coupon payment.

Once the bond matures, the (upper) adjusted principal or face price is paid. The final Wholesale indicator (WPI) is getting used for providing inflation protection. Just in case of revision within the base year for the WPI series, the base conjunction technique would be used to construct an identical series for regulating.

Also Read: Marital Rape UPSC: Let’s Acknowledge the Arguments for Criminalizing Marital Rape!

Inflation Index Bonds UPSC

All the facts and features about this topic are covered perfectly in this article. Here is more relevant information and knowledge. These bonds are being issued by auction methodology. At the initial auction, they’re listed within the secondary market The non-competitive portion is inflated from five p.c to up to twenty p.c to encourage retail participation. To begin with, these bonds are being issued for a tenor of ten years.

The basic purpose for releasing IIBs is to safeguard the savings of the poor and class from inflation. One more reason was to supply incentives to the unit sector to save lots of monetary instruments instead of gold. The increasing accounting Deficit (CAD) driven by higher gold imports was changing into a reason behind serious concern.

Since the investment in IIBs will pay attention to the prevailing inflation, the retail investors are benefited. This can be because they assist the little capitalist to safeguard even the principal quantity against inflation, excluding receiving the yield of the investment, which supports the prevailing inflation.

Since the gold costs are volatile and therefore the tiny capitalist cannot accumulate enough capital to invest in real estate, it’s expected that IIBs would be useful for the capitalist. It’s additionally expected to spice up the domestic savings and reverse the decline in the savings-to-GDP ratio.

However, the aim of issuing these bonds is consummated on the condition that they’re on the market for the most part to retail investors, instead of huge pension funds or insurance firms. Linking them with the CPI instead of WPI, in the future, would be another step in the right direction.

Also Read: Carbon Budget UPSC: Check Out the UPSC Notes on Carbon Budget!


The UPSC notes of different topics are the most significant part of this prestigious exam. This is because the updated topics are asked in almost all the sections of the paper and the candidates are required to answer these questions in the interview as well.

Aspiring to work as an administrator of the country and a representative of the functions happening in the nation, aspirants require a good hold on the current happenings of the country. If you want to grab more relevant content, you can visit the UPSC Pathshala website. For more questions and inquiries, visit the website.

Content Protection by
Inflation Index Bonds UPSC: Check Out the Salient Features of the Index Bonds!
Article Name
Inflation Index Bonds UPSC: Check Out the Salient Features of the Index Bonds!
If you are doing UPSC exam preparation, you should click here and read this extremely crucial topic on the inflation index bonds UPSC.
Publisher Name
UPSC Pathshala
Publisher Logo

About the Author

Shruti Rag

Shruti is a creative and enthusiastic content writer along with being a budding journalist. She is a genuine-hearted and exploring girl with a dash of millennial approach. Her love for speaking and writing has made her pursue her bachelor's in journalism and mass communication. She believes in the quote, "if you will never fail in life, you will never rise like a phoenix from its ashes''. She gives strengthening and positive paths to the students by her content. Her interest lies in reading, traveling, and singing. Innovations and realism let you discover your identity. She has faith in wisdom and determination to touch the skies.

View All Articles