Government will launch inflation-linked bonds worth Rs 1000 crore on June 4

NEW DELHI: The government will launch first tranche of inflation-linked bonds totalling 1,000 crore on June 4, hoping that the instrument that will give real return to investors and wean them away from gold.

"The Government of India has announced the sale of new Inflation Indexed Government Stock - 2023 for a notified amount of 1,000 crore through yield-based auction ... (scheduled for) June 4," the Finance Ministry said in a statement on Wednesday.

The proposed 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.

Earlier this month, the government had announced plans to issue IIBs worth 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 one beginning October will be reserved for retail investors.

FM P Chidambaram had, in his budget speech, announced IIBs to protect savings of poor and middle classes from inflation and provide incentives to households to encourage them to save in FIs rather than buy gold.

The Reserve Bank of India (RBI) will auction the IIBs , index Stock-2023, on June 4. The auction will be conducted using uniform price method, the central bank said.

"Twenty per cent of the notified amount of the sale of the stocks will be allotted to eligible individuals and institutions as per the scheme for non-competitive bidding facility in the auction of government securities,'' said the RBI in a statement. Earlier this month, the government had announced plans to issue IIBs worth 12,000-15,000 crore this fiscal, with maturity period of 10 years.