Government's inflation bonds 2.0 pique interest among banks, investors

RBI now targets CPI inflation and is committed to keep retail inflation checked at a maximum of 6%

The government’s plan to reintroduce inflation-indexed bonds is being seen with some interest as previous issuances were not successful for a wide variety of reasons.
 
The most recent case in hand was the wholesale price index (WPI)-based bonds that failed miserably in the market after inflation rapidly started sliding, and the Reserve Bank of India (RBI) adopted consumer price index (CPI)-based inflation for its policy formulation. The government had to buy back Rs 65 billion of bonds two years down the line after they were issued in 2013. The original maturity of the bonds was 10 years.
 
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