×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 08 March, 2021

  • 5 Min Read

Lowering Government Yields

Lowering Government Yields

Government Security (G-Sec) yields could soften temporarily as the Indian government’s fiscal deficit may undershoot FY2021 Revised Estimate (RE) by Rs.50,000 crore to Rs.90,000 crore.

  • G-Secs are government debt issuances used to fund daily operations, and special infrastructure and military projects.
  • They guarantee the full repayment of invested principal at the maturity of the security and often pay periodic coupons or interest payments.
  • The two key categories are:
    • Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    • Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years
  • As they are issued by the government, they are considered to be risk-free.
  • The trade-off of buying these securities is that they tend to pay a lower rate of interest than corporate bonds.
  • Investors in G-Sec will either hold them to maturity or sell them to other investors on the secondary bond market.

Why G-Secs?

  • Like bank fixed deposits, g-secs are not tax-free.
  • They are generally considered the safest form of investment because they are backed by the government.
  • However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
  • Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
  • In the forthcoming financial year, the government plans to borrow Rs 12 lakh crore from the market.
  • When the government demands so much money, the price of money (i.e., the interest rate) will move up.
  • It is in the government’s and RBI’s interest to bring this down.
  • That can only happen by broadening the base of investors and making it easier for them to buy g-secs.

Source: TH


India–Azerbaijan

A year after tensions arising from Operation Sindoor, India and Azerbaijan have taken steps to restore and normalise bilateral relations. The 6th round of Foreign Office Consultations, held in Baku, marked the first such engagement since 2022, signaling renewed diplomatic momentum. Recent Diplomatic Engagement During the consultations, bo

India–Australia Economic Cooperation and Trade Agreem

The India–Australia Economic Cooperation and Trade Agreement has completed four years since its signing. Both countries now aim to build on this progress through strengthened collaboration and ambitious targets, including reaching AUD 100 billion in bilateral trade by 2030. What is the India–Australia Economic Cooperation and Tra

ADR Report on Political Funding

A recent report by the Association for Democratic Reforms (ADR) analyses donations of ?20,000 or more declared to the Election Commission of India (ECI) by national political parties for FY 2024–25, highlighting transparency and accountability in political financing. Key Findings Massive Funding Surge Total donations to nationa

Maritime Chokepoints

Maritime chokepoints are narrow channels along global shipping routes where maritime traffic is concentrated. These points are geopolitically and economically critical, as they handle a large proportion of global trade, especially energy shipments. Current Relevance Over two-thirds of seaborne energy trade passes through a handful o

US-Israel-Iran War

Following the launch of Operation Epic Fury (U.S.) and Operation Roaring Lion (Israel), the geopolitical landscape has shifted fundamentally with the confirmed death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.Iran retaliated through Operation True Promise 4, launching missile attacks against Israel and nearby Gulf states. The escala

DNA

05 Apr,2026

Toppers

Search By Date

Newsletter Subscription
SMS Alerts

Important Links

UPSC GS Mains Crash Course - RAW