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UPSC 2022: With reference to the "G20 Common Framework", consider the following statements : It is an initiative endorsed by the G20 together with the Paris Club. It is an initiative to support Low Income Countries with unsustainable debt. Which of the statements given above is/are correct ? With reference to the Indian economy, what are the advantages of "Inflation-Indexed Bonds (IIBs)" ? Government can reduce the coupon rates on its borrowing by way of IIBs. IIBs provide protection to the investors from uncertainty regarding inflation. The interest received as well as capital gains on IIBs are not taxable. Which of the statements given above are correct ?
(a)1 and 2 only
(b)2 and 3 only
(c)1 and 3 only
(d)1, 2 and 3
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Not attemptedCorrect Answer: (a) 1 and 2 only
IIBs allow the government to float bonds whose principal is indexed to inflation, so the real cost of borrowing falls and coupon rates can be lower (Statement 1 true). Because both principal and interest move with inflation, investors’ real returns are protected from inflation uncertainty (Statement 2 true). However, IIB interest and capital gains are taxed like other G-Secs, so Statement 3 is false. Hence only 1 & 2 are correct. ([edukemy.com](https://edukemy.com/blog/upsc-prelims-2022-question-5/?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2022 Indian Economy question?▼
The correct answer is option (a): 1 and 2 only. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Financial Markets & Capital Markets question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2022, GS Paper 1, as Question 5. It falls under Indian Economy > Financial Markets & Capital Markets.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from Financial Markets & Capital Markets?▼
UPSC has asked 39 questions from Financial Markets & Capital Markets (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.