The government will launch first tranche of inflation-linked bonds totalling Rs 1,000 crore on June 4 to give an option to investors to guard savings against inflation and dissuade them from investing in gold.
"The Government of India has announced the sale of new Inflation Indexed Government Stock - 2023 for a notified amount of Rs 1,000 crore through yield-based auction ... (scheduled for) June 4," the Finance Ministry said in a statement.
The proposed Inflation Indexed Bonds (IIBs) would form part of the government's borrowing programme for the first half of the current fiscal, it said.
"The auctions will be conducted using uniform price method," the statement added.
For these bonds, the non-competitive bidding segment of 20% has been extended to retail and mid-segment investors to achieve greater participation of investors.
In case of other government securities, the non-competitive segment for retail investors is 5%.
The result of the auctions will be announced on June 4, 2013 and successful bidders have to make the payments on June 5, the statement added.
Earlier this month, the government had announced plans to issue IIBs worth Rs 12,000-15,000 crore this fiscal. The maturity period of these bonds will be 10 years.
After the first tranche, bonds will be issued on last Tuesday of every month.
While the first series of the bonds will be open for all class of investors, the second series issue - beginning October - will be reserved exclusively for retail investors.
In the Budget, Finance Minister P Chidambaram had announced issuance of IIBs to protect savings of poor and middle classes from inflation and provide incentives to households to encourage them to save in financial instruments rather than buy gold.
Both the government as well as the RBI are concerned over the rising gold imports as its putting pressure on Current Account Deficit (CAD), which widened to historic high of 6.7% in third quarter of 2012-13.
Gold and silver imports last month shot up 138%, year-on-year, to $7.5 billion.
