The News Editorial Analysis 27th Dec 2021

The News Editorial Analysis 27th Dec 2021

The News Editorial Analysis 27th Dec 2021

The elderly are assets, not dependents

Proof of a truly developed country lies in the way it not only nurtures its young but also cares for its elders, equally

In the past few decades, concerns about “population explosion” have given way to joy about a “demographic dividend”. The latter is expected to give a push to economic growth due to the lower dependency ratio which results from having a larger proportion of the population in the working-age group. The “Asian Tigers” — countries such as South Korea, Taiwan, Hong Kong and Singapore — as also China, have exemplified the benefits.

NFHS-5 data

The larger youth population is also expected to give an impetus to innovation and entrepreneurship. Not surprisingly, then, the young are in focus, with many programmes to facilitate their education, entrepreneurship, sports training, etc., but also well-being. This is as it must be, not just from an economic viewpoint, but especially from the perspective of health. Poor health, like inadequate education, could well nullify the demographic advantage. Of concern is data from the latest National Family Health Survey (NFHS)-5, which indicates that while much progress has been made, the metrics for infant and child health continue to be dismal, with some being even lower than what they were five years ago.

Yet, even as we pay attention to the young, there is both need and benefit in also looking at the other end of the spectrum. Life expectancy in India has risen from 50 (1970-75) to 70 years (2014-18); as a result, the number of elders (those over 60 years) is already 137 million, and expected to increase by 40% to 195 million in 2031, and 300 million by 2050. While one perspective would look at them as dependents (and, therefore, a drag on the economy), a rather different view would look at them as a potential asset: a massive resource of experienced, knowledgeable people. Converting them from dependents to productive members of society depends on two primary factors: their health and their capabilities.

Changing health-care needs

Generally, the elderly population needs more medical attention of a diverse range. As per the first ever Longitudinal Ageing Study in India (LASI), 11% of the elderly suffer from at least one form of impairment (locomotor, mental, visual and hearing). It is estimated that 58 lakh Indians die from noncommunicable diseases (NCDs) in India annually, and cardiovascular disease (CVD) prevalence is estimated to be 34% amongst 60-74 yearolds, rising to 37% in those above 75 years. As we move to a demographic where the growth rate of elders far exceeds that of the young, perhaps the biggest challenge that the country would face is to provide a range of quality, affordable, and accessible health and care services to the elderly. They require an array of specialised medical services at home including tele or home consultations, physiotherapy and rehabilitation services, mental health counselling and treatment, as well as pharmaceutical and diagnostic services. These needs are particularly evident now, with elders being advised to stay indoor as a precaution against the novel coronavirus epidemic.

As per the 2016 Healthcare Access and Quality Index (HAQ), India improved its HAQ score from 24.7 in 1990 to 41.2 in 2016. However, we still are significantly below the global average of 54 points, ranking at the spot of 145 out of 195 countries. The low HAQ worsens even further in smaller cities and rural areas where basic quality health-care services are very inadequate. Factors such as familial neglect, low education levels, socio-cultural beliefs and stigma, low trust on institutionalised health-care services and affordability exacerbate the situation for the elders. Inequity in health-care access compounds the problems for the elderly, who are already, physically, financially and at times psychologically restricted in understanding, responding to, and seeking medical care for various ailments. Consequently, most of them live their years in neglect.

Inadequate schemes

Health care of the elderly has, sadly, been greatly neglected. An overwhelming proportion of the elders are from the lower socio-economic strata (including many who are destitute). They are unable to afford the cost of health care and slip into ever poorer health. The vicious cycle of poor health and unaffordable health costs is further accelerated by their inability to earn a livelihood. As a result, not only are they economically unproductive but are dependent on support from family or others. This, and poor physical health, adds to their mental and emotional problems. The Government does have schemes that cover the elderly and seeks to take care of these issues, but they are completely inadequate.

Despite Ayushman Bharat, the Government’s health insurance scheme for the deprived, and private health insurance, a NITIAayog report indicates that 400 million Indians do not have any financial cover for health expenses. One can be sure that a very large number of elders are among the uncovered. Both the Centre and States have pension schemes for the elders, but these provide but a pittance — as low as ₹350 to ₹400 a month in some States. Even this is not universal.

A 2007 law requires States to ensure earmarked facilities for elders in every district hospital, headed by a doctor with experience in geriatric care. Yet, a status report filed by the Government in the Supreme Court of India in 2019 stated that 16 States and Union Territories (‘of 35’) did not have a single ward/bed dedicated to elders.

Opportunities in challenges

Given the range of diverse challenges, can India take care of its aging population? The success of the COVID-19 vaccination strategy gives hope: a seniors-first approach led to over 73% of elderly population receiving at least one dose and around 40% being doubly vaccinated by October 2021.

Considering the demographic trends, India should reimagine its entire health-care policy for the next few decades, with an elderly prioritised approach. As senior citizens require the most diverse array of health-care services, the creation of adequate services for them will benefit all other age-groups. Apart from legislating pro-elderly health care and insurance policies, India needs to aggressively take certain measures, while finding opportunities amidst this challenge.

India needs to rapidly increase its public health-care spending, and invest heavily in the creation of well-equipped and staffed medical care facilities and home health-care and rehabilitation services.

Presently, India has a major deficit in infrastructure and skilled medical care resources, with 1.3 hospital beds, 0.65 physicians, and 1.3 nurses for every 1,000 people. Over the next decade, we have the potential to add more than 3 million beds, 1.54 million doctors and 2.4 million nurses. We need to accelerate implementation of programmes such as the National Programme for Health Care of the Elderly (NPHCE). The Ayushman Bharat and PM-JAY ecosystems need to be further expanded and similar, special health-care coverage schemes and services need to be created for senior citizens from the lower economic strata. The National Digital Health Mission has tremendous potential to expand medical consultations into the interiors of the country. However, this requires a digital literacy campaign for senior citizens.

These essential steps will help to convert elders into a massive resource for socio-cultural and economic development, giving an altogether different perspective to “demographic dividend”. After all, the proof of a truly evolved and caring nation lies in the way it not only nurtures its young but also how it cares for its aging population.

Kiran Karnik is Chairperson, HelpAge India and an author. His latest book is ‘Decisive Decade: India 2030: Gazelle or Hippo’

A chance to tap India’s high equity in Myanmar

Though there are challenges, the momentum gained from the Indian Foreign Secretary’s recent visit must not be lost

The short visit to Myanmar (December 22-23) by India’s Foreign Secretary Harsh Vardhan Shringla had a clearly-etched mandate: to deepen cooperation with an important neighbour. His mission succeeded to a large extent, but challenges remain.

The Indian delegation took a special flight to Naypyitaw and Yangon. It certainly eased logistics for the officials, but was fully utilised as it also carried one million India-made vaccine doses, as a gift to the people of Myanmar.

Regional dimensions

Mr. Shringla followed India’s calibrated middle-path position. Not the West’s reflexive policy of condemnation, threats and sanctions against the military regime, but a position reflective of regional realities. It is no easy task.

Since the military coup on February 1, 2021, the international community has stayed divided on how to address the derailment of Myanmar’s transition to democracy. For a decade, the country’s ‘hybrid democracy’ based on power-sharing between the military and elected representatives ran well enough. But an overwhelming electoral victory of the National League for Democracy (NLD) led by Daw Aung San Suu Kyi in November 2020, unnerved the military leadership. It apprehended that armed with a new mandate, the NLD would move fast to clip the Army’s wings. The Tatmadaw (Myanmar’s military) moved faster, seizing power in violation of the Constitution and putting down the Opposition with an iron hand. The results have been disastrous for democracy, economy and the people’s well-being, especially as the political crisis coincided with COVID-19 ravaging the ‘Golden Land’.

Global dismay was evident in the western sanctions, but others such as Russia saw the opportunity to strengthen ties with the new rulers. China regretted the loss of Daw Suu Kyi as a valuable ally but took urgent steps to stabilise and expand cooperation with the military regime. The Association of Southeast Asian Nations (ASEAN) first showed creativity through its ‘Five-Point Consensus’ formula, but later its unity stood damaged once Myanmar’s top leader Senior General Min Aung Hlaing (picture) refused to cooperate in the formula’s implementation.

In this highly polarised and complex situation, Mr. Shringla has succeeded in holding substantive discussions with the top State Administrative Council (SAC) leadership and political parties including the NLD in Naypyitaw as well as Senior General Min Aung Hlaing and the representatives of civil society in Yangon. India’s position, as conveyed to Myanmar, is similar to and supportive of ASEAN: release of political prisoners; resolution of issues through dialogue; cessation of “all violence”; and full cooperation with ASEAN. In recent years, India has assisted Myanmar through capacity-building programmes for strengthening the transition to democracy. This assistance remains available, but it is not an offer of mediation by India in the military-NLD conflict. This burden will have to be borne by ASEAN.

That India’s position carries confidence is reflected in an unusual interactive meeting Mr. Shringla held with a select group of Myanmar-based foreign Ambassadors.

Bilateral concerns

Myanmar’s military is responding as it can. India’s principal concerns pertaining to border security and stability in its neighbourhood were clearly conveyed, especially the noticeable escalation of activities of anti-India insurgent groups. By handing over five cadres of the Manipur People’s Liberation Army to Indian authorities before the Shringla visit, the military government demonstrated its desire for cooperation. It also renewed the previous pledge that its nation’s territory would not be allowed to be used for any activities inimical to India.

The second issue — the outcome of Myanmar’s instability — is that of refugees. Several thousands of Myanmar people have sought shelter in Mizoram. This will only be reversed by a political settlement in Myanmar, through dialogue. This issue too was taken up seriously, despite the understandable reiteration later of known positions in the regime’s formal take on discussions last week.

Economic cooperation has always been a major agenda item in all bilateral discussions with Myanmar. This visit was no exception, with the usual emphasis on “people-centric socio-economic developmental projects”. Central to this is India’s long-delayed commitment to “expeditious implementation” of mega initiatives such as the Trilateral Highway and Kaladan projects. Unfortunately, no revised deadlines were announced. These projects continue to be the Achilles heel of the relationship.

Protocol departure

Still, India continues to have high equity in Myanmar, which it must now carefully leverage. It is reflected in the special gesture made by Senior General Min Aung Hlaing (who is Chairman of the SAC and Prime Minister) to receive Mr. Shringla and hold detailed discussions in Yangon. This is unusual. The Myanmar establishment is highly protocol-conscious. My innings as Ambassador in Yangon saw three visits by the Indian Foreign Secretary (i.e., two different office-holders), but they were not received by the regime’s highest dignitary. The protocol departure for Mr. Shringla revealed current political realities which should be carefully factored in by those who wrongly argue that China is the only friend Myanmar has.

Also, though the request for the Indian Foreign Secretary’s call on Daw Suu Kyi was not acceded to, as was expected, it should be underlined that New Delhi made the request. There are other ways to pursue the matter as India has done in the past. A quiet approach then resulted in a rare call by this writer on Daw Suu Kyi in January 2003 when she was still under house arrest. Projecting the request this time around may yet produce results.

Back home, the steps to take

Both the Government and the Opposition in Myanmar seem to understand India’s sober approach. India can leverage the gains of this visit and keep up the momentum by inviting Myanmar’s Foreign Minister at an appropriate time as well as other important stakeholders such as leaders of political parties, civil society and think tanks to India for deliberations with their counterparts here. The single goal should be to put Myanmar back on the path of becoming “a stable, democratic and federal union”.

Iran nuclear talks reverberate in the Gulf

The Gulf Cooperation Council’s interests directly impinge on the outcome of the discussions

While Iran is engaged in negotiations in Vienna on matters relating to the U.S.’s re-entry into the Joint Comprehensive Plan of Action (JCPOA) and the relaxation of the sanctions, two parties absent at the talks are watching developments very closely — Israel and the six states of the Gulf Cooperation Council (GCC) — whose interests directly impinge on the outcome of the discussions.

Israel, in public remarks, has focused on Iran’s progress towards weaponisation while ignoring its own nuclear weapons’ capability. Serving and retired security officials have been mobilised to urge immediate and harsh military action on Iran. Unlike Israel’s theatrics, the GCC countries have been pursuing a more low-key but more constructive an approach to regional challenges — diplomatic engagement with Iran. This is largely because the U.S.’s credibility as the GCC’s security partner was severely dented when President Donald Trump failed to protect their interests in the face of Iranian attacks on their assets in 2019. U.S. standing in the region reached rock-bottom during its chaotic withdrawal from Afghanistan in August this year.

GCC engagement with Iran

The UAE had first reached out to Iran in July 2019, when its senior officials visited Tehran to discuss maritime security. Following the U.S. assassination of Iranian general Qassem Soleimani in January 2020, the UAE and Saudi Arabia had called on the U.S. to reduce regional tensions, recognising that more conflict would bring the GCC states in the direct line of an Iranian retaliation. The GCC countries’ estrangement from the U.S.’ security partnership has been further encouraged by President Joe Biden’s avowed disengagement from the region in favour of containing China in the Indo-Pacific.

Since April this year, Saudi Arabia and Iran have had five meetings in Baghdad – mainly to rebuild confidence between them, re-establish diplomatic ties, and address specific areas of conflict, Yemen and Syria. Given the hostility of over a decade, no major success has been announced so far, but talks are ongoing.

The revival of the nuclear talks with Iran from November and the Israeli sabre-rattling through the Vienna negotiations have pushed the GCC states to take “their destinies in their in their own hands”, as noted by the Abu Dhabi-based commentator, Raghida Dergham. On November 23, Iran’s chief negotiator, Bagheri-Kani, visited Abu Dhabi, possibly to seek the UAE’s good offices to facilitate an agreement with the U.S.

Soon thereafter, the UAE’s influential national security adviser, Sheikh Tahnoun bin Zayed, visited Tehran on December 6. Reports say that Iran may have sought the UAE’s help to facilitate financial transactions once the sanctions are eased. Trade ties are already flourishing: in 2021-22, Iran’s imports from the UAE are expected to reach $12 billion.

UAE officials have also made some significant public statements relating to Iran. Anwar Gargash, Foreign Affairs Adviser to the UAE President, said at a conference in Washington in early December that states should “avoid vacuum and escalation” with adversaries and rivals. The message from the UAE is that this is “the era of crisis management and conflict resolution” and it would pursue rapprochement among the regional states.

The UAE’s ties with Israel are a part of this approach. The visit of Prime Minister Naftali Bennett to Abu Dhabi on December 13 took place a week after Sheikh Tahnoun’s visit to Tehran. In 10 months of 2021, UAE-Israel trade has reached $875 million, besides the $1 billion UAE stake in Israel’s Tamar gas field. Six flights a day from Israel to Dubai are bringing in several thousand Israeli businessmen and tourists to the UAE. The UAE is making it clear that in its regional partnerships it does not have a zero-sum approach.

From Vienna, instead of hard news, we have seen public posturing by the U.S. to camouflage its own responsibility for the present imbroglio. Iran’s insistence that the U.S. return to the JCPOA, remove the sanctions it had imposed under the rubric of ‘maximum pressure’, and give some assurance that a future U.S. administration will not withdraw from the agreement makes complete sense. But the polarised political environment in the U.S., Mr. Biden’s weak political position in Congress, and the pervasive hostility to the Islamic Republic make it impossible for the U.S. to accept Iran’s demands. What we are, therefore, left with is the U.S. delegation placing on Iran the onus of possible failure of the talks by blaming it for being hardline, irrational and not seriously interested in a positive outcome. In this situation, unless there is a real change in the U.S.’s approach, it seems unlikely that Vienna will deliver an agreement. What does this mean for the Gulf?

More U.S. sanctions and more Israeli aggressiveness are well past their use-by date. The harshest U.S. sanctions on Iran have failed to bring Iran back to the negotiating table or brought about regime change. In fact, as China buys more Iranian oil and the UAE pursues trade ties, the death knell of the ‘maximum pressure’ regime is already being sounded. U.S. and Israeli commentators are also speaking out about the operational difficulties involved in an effective strike on Iran’s nuclear programme and the harmful implications this could have for Israel itself and the region, while even providing an impetus to the weapons programme that Iran has so far rejected. To avoid the possibility of a military attack, the Iranian spokesman in Vienna has just said that Iran will not enrich uranium beyond 60%, even if the talks fail.

Regional security architecture

In this background, there are two possible scenarios for regional security. In the absence of a nuclear deal, it is likely that Israel will push for a “normalisation” of ties with more Arab states so that it builds a coalition of regional states against Iran. However, it is difficult to see how this can be achieved. There is already widespread popular opposition to this initiative across West Asia. Again, since Iran will not be intimidated into serving the U.S./ Israeli agenda, it will only aggravate regional instability and portend conflict.

A more useful framework for the region would be an inclusive security arrangement. The first steps in bringing Iran into this architecture have already been taken through the several rounds of the Saudi-Iran dialogue, the UAE-Iran engagements, the Baghdad conference in August that brought together all the regional states, and the recent Saudi effort to build a security consensus among the GCC states at the recent Riyadh summit. This summit has accepted “strategic integration”, common foreign policies, and a joint defence agreement. But given the divisions within the GCC and the positions of Qatar, Kuwait and Oman, such a consensus will only emerge if Iran is integrated into the security framework.

Israel’s inclusion will be more difficult – its domestic politics has been framed for decades on the basis of hostility towards Iran. But the valuable results of a more accommodative approach to the region, already apparent in the positive results yielded by normalisation with the UAE, could over time help Israel’s leaders see the benefits of deeper integration with the West Asian neighbourhood.

Perhaps, this is what former Prime Minister Ehud Barak had in mind when he wrote recently that Iran’s ability to pursue its nuclear programme despite the severest U.S. sanctions is “a new reality [that] requires a sober assessment of the situation, decisions and actions and not hollow public threats”.

Anti-dumping duty on five Chinese goods

India has imposed anti-dumping duty on five Chinese products, including certain aluminium goods and some chemicals, for five years to protect local manufacturers from cheap imports from the neighbouring country.

According to separate notifications of the Central Board of Indirect Taxes and Customs (CBIC), the duties have been imposed on certain flat-rolled products of aluminium — sodium hydrosulphite used in the dye industry, silicone sealant, used in manufacturing solar photovoltaic modules and thermal power applications, and hydrofluorocarbon (HFC) component R-32 and hydrofluorocarbon blends, both used in refrigeration.

These duties were imposed following recommendations of the Commerce Ministry’s investigation arm, the Directorate General of Trade Remedies (DGTR).

The DGTR, in separate investigations, has concluded that these products have been exported at a price below normal value in Indian markets, which has resulted in dumping.

The domestic industry has suffered material injury due to the dumping, the DGTR said.

The CBIC has imposed the duty on a vehicle component — axle for trailers in CKD/SKD (complete and semi knocked down) form to protect domestic makers from cheap Chinese imports.

It has also slapped the duty on imports of calcined gypsum powder from Iran, Oman, Saudi Arabia and the UAE for five years. While the DGTR recommends the duty to be levied, the Finance Ministry imposes it.

Tutu, who fought for a ‘Rainbow Nation’, dies at 90

A tireless activist, the Archbishop won the Nobel Peace Prize in 1984 for combating white minority rule in South Africa

South African anti-apartheid icon Archbishop Desmond Tutu, described as the country’s moral compass, died on Sunday aged 90, sparking an outpouring of tributes for the outspoken Nobel Peace Prize laureate.

Tutu, who had largely faded from public life in recent years, was remembered for his easy humour and characteristic smile — and above all his tireless fight against injustices of all colours.

South Africa’s President Cyril Ramaphosa called him a man of “extraordinary intellect, integrity and invincibility against the forces of apartheid”.

‘Liberated South Africa’

Mr. Ramaphosa said Tutu’s death was “another chapter of bereavement in our nation’s farewell to a generation of outstanding South Africans who have bequeathed us a liberated South Africa”, after the country’s last apartheid-era President F.W. de Klerk died in November.

Former U.S. President Barack Obama, the country’s first black leader, hailed Tutu as a “moral compass”.

“A universal spirit, Archbishop Tutu was grounded in the struggle for liberation and justice in his own country, but also concerned with injustice everywhere,” Mr. Obama said in a statement.

Kenyan President Uhuru Kenyatta said Tutu had “inspired a generation of African leaders who embraced his non-violent approaches in the liberation struggle”.

European leaders joined the chorus, with U.K. Prime Minister Boris Johnson calling him a “critical figure” in the struggle to create a new South Africa and French President Emmanuel Macron saying Tutu had “dedicated his life to human rights and equality”.

Britain’s Queen Elizabeth II said Tutu’s death “deeply saddened” her, while the Vatican said Pope Francis offered “heartfelt condolences to his family and loved ones”.

The Dalai Lama called Tutu his “respected elder spiritual brother and good friend”.

Fight against injustice

A tireless activist, Tutu won the Nobel Peace Prize in 1984 for combating white-minority rule in his country.

He coined the term “Rainbow Nation” to describe South Africa when Nelson Mandela became the country’s first black President in 1994.

And he retired in 1996 to lead a harrowing journey into South Africa’s brutal past as head of the Truth and Reconciliation Commission, which revealed the horrors of apartheid.

However, Tutu has also criticised the ruling African National Congress (ANC) — the vanguard of the fight against white-minority rule. He challenged Mandela over generous salaries for Cabinet ministers and stridently criticised the corruption that mushroomed under ex-President Jacob Zuma.

Ordained at the age of 30 and appointed archbishop in 1986, he used his position to advocate for international sanctions against apartheid, and later to lobby for rights globally.

Tutu was diagnosed with prostate cancer in 1997 and repeatedly underwent treatment. His public appearances became rarer. In one of his last this year, he emerged from hospital in a wheelchair to get a COVID-19 vaccine, waving but not offering comment.

Log on to g-secs with RBI’s Retail Direct

The News Editorial Analysis 27th Dec 2021

For long, Indian retail investors seeking regular income haven’t had access to the safest and most reliable option in the market — the government security.

Yes, most of the money you invest in insurance products, pension funds and provident funds, and some of the money you invest in bank deposits and debt mutual funds gets channelled into government debt securities (g-secs).

But this indirect ownership requires you to incur costs charged by these vehicles that eat into your returns. Now, with the government allowing direct retail ownership you can bypass such intermediaries. Here’s a deep dive into RBI’s new Retail Direct platform for buying g-secs.

What it offers

This platform allows individuals to open and maintain a Retail Direct Gilt (RDG) account directly with the RBI.

To open your account, you need a PAN card, a savings bank account and an officially valid KYC document. NRIs eligible to invest in g-secs under FEMA can open this account too.

The onboarding process, which can be done completely online, is not as simple as that for some new-age fintech platforms. But it can be completed in a day or so if your KYC details are correctly captured in the central repository.

G-secs can be bought either during their initial issue or after they begin to trade in the secondary market.

RBI’s Retail Direct platform gives you access to primary auctions first. To get access to secondary market trades which happen on the NDS-OM (Negotiated Dealing System – Order Matching), you need to apply separately on Retail Direct to get a user login and password.

RBI’s Retail Direct is not the only platform that allows you to participate in g-sec auctions. NSE’s goBID and broker-owned platforms such as Zerodha Coin also offer such access and may be easier to onboard.

But the RBI’s platform scores over others on cost, as it charges no fees for account opening, maintenance or transactions.

RBI conducts periodic auctions of g-secs according to a schedule (called the borrowing calendar) that it puts out every half year for g-secs and quarter for treasury bills. Through this new platform, retail investors can invest a minimum of ₹10,000 going up to ₹2 crore in these auctions.

How auctions work

When you log on to Retail Direct, you’ll find a dashboard listing out the securities that are currently being auctioned. They can be of four types — dated government stock (Central government borrowings for 1 year to 40 years), treasury bills or T-bills (Central government borrowings for 91, 182 and 364 days), State Development Loans (State government borrowings for 1 year to 30 years) and Sovereign Gold Bonds.

You’ll find details such as the type of security, its maturity date, total auction amount, the amount reserved for retail bidding (called ‘non-competitive’ bidding amount) and the reserve price and yield.

RBI sets a maximum coupon rate or minimum price for each security in every auction and institutions bid based on this.

The lowest coupon or highest price at which an auction gets fully subscribed becomes the ‘cut-off’ yield or price. As a retail investor you need not know how to bid and can simply choose at the final cut-off price or yield that will be discovered by institutions. Money is collected upfront from your bank account based on the reserve price set by the RBI.

If the auction discovers a lower price, the excess is refunded. To know the cut-off price or yields, you can track the auction results put up on the RBI website.

Once you’ve got allotment in the auction, you simply need to hold your bond until maturity when the RBI will automatically redeem it.

T-bills are issued below face value and redeemed at face value, the difference being your interest. Other g-secs pay half-yearly interest at the cut-off yield.

Though g-secs a re-listed on the NDS-OM platform, where you can sell or buy them in theory, a majority of them (except for recent 10-year g-secs) are thinly traded and you may not be able to sell at a time of your choice. When you buy g-secs therefore, do match their maturity to your financial goal and do not budget for liquidity before maturity.

How to use them

With fixed income options such as bank deposits, post office schemes, NCDs and debt mutual funds already on the menu, where could g-secs fit into your portfolio?

Well, g-secs could suit investors who prioritise safety and assured returns over attributes such as liquidity and taxation. Small savings schemes may score over direct g-secs in terms of returns because the government tends to offer special rates on them though they carry a similar sovereign backing.

Debt mutual funds invest in corporate bonds and are certainly not as safe as g-secs. But they score over g-secs on liquidity (you can sell your units anytime to the fund) and offer more friendly taxation.

If held for over 3 years, growth options of debt funds allow you to accumulate the interest and pay long-term capital gains at 20% after indexation benefits. Interest from g-secs is taxed every year at your slab rate.


The News Editorial Analysis 26th Dec 2021

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