JP Morgan to add Indian G-Secs to its debt index from next year
This would help attract higher foreign flows, as many overseas funds are mandated to track global indices
We welcome this development. JP Morgan has made this decision on their own. It attests to the confidence that financial market participants and financial markets, in general, have on India’s potential and growth prospects - V Anantha Nageswaran, Chief Economic Advisor
New Delhi: Global financial firm JP 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. Commenting on the issue, Economic Affairs Secretary Ajay Seth said, “It is a welcome development showing confidence in the Indian Economy.”
CEA V Anantha Nageswaran said: “We welcome this development. JP Morgan has made this decision on their own. It attests to the confidence that financial market participants and financial markets, in general, have on India’s potential and growth prospects.”
