ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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India’s Inclusion in the JP Morgan GBI-EM Indices

A Path to Eden or Just Another Sin?

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The concept of original sin was introduced by Eichengreen and Hausmann (1999), defining it as a situation in which the domestic currency cannot be used to borrow abroad or to borrow long term, even domestically. Subsequently, Eichengreen et al (2003) redefined the concept as a countrys inability to borrow abroad in its own currency, suggesting the term domestic original sin for the countrys inability to borrow in its own currency long-term domestically. We adopt the Eichengreen et al (2003) definition of original sin.

Armed with this information, let us now delve into Indias inclusion in JP Morgans Government Bond Index-Emerging Markets (GBI-EM) of local currency government bonds (LCGBs) and note that JP Morgan offers six distinct related indices. They are GBI-EM, GBI-EM Broad, GBI-EM Global, and their diversified counterparts, each varying in the countries included and the assigned weights.

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Published On : 20th Jan, 2024

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