The Finance Ministry intends to first test ‘inflation indexed bonds’ with institutional investors.
Plans are afoot to structure such a bond (basically G-sec) for the institutional market before offering it to retail investors, official sources said.
It will most likely be in the nature of certificates (such as national savings certificates) for retail investors, it is learnt.
However, no decision has yet been taken as to whether indexation should happen with wholesale price index (WPI) or consumer price index.
In India, WPI is the main gauge for inflation. CPI has recently got more attention given its double digit year-on-year increase in recent months.
Raising savings
Inflation indexed bonds, which found mention in recently announced 2013-14 Budget, are seen as an attempt to raise household savings and wean away Indians from gold.
A wider variety of reliable financial savings opportunities, such as inflation-indexed bonds, and easier access to them could help raise the share of financial savings in total savings, the Economic Survey had suggested.
srivats.kr@thehindu.co.in