Economics · Indian Financial System

A retail investor is evaluating various debt instruments available in the Indian market, specifically State Development Loans (SDLs), Sovereign Gold Bonds (SGBs), and Inflation Indexed Bonds (IIBs). Consider the following statements: 1. State Development Loans are dated securities issued by State Governments through RBI auctions and are eligible for SLR purposes for banks. 2. Sovereign Gold Bonds are government securities denominated in grams of gold and offer a fixed interest rate alongside capital appreciation potential. 3. Inflation Indexed Bonds protect the principal and interest from inflation by linking them to indices like WPI or CPI. 4. SDLs always carry a lower interest rate than Central Government Securities of the exact same maturity because states have a more diversified revenue base. 5. SGBs have an eight-year tenure with an exit option from the fifth year onwards on interest payment dates. 6. The interest earned on Sovereign Gold Bonds is completely tax-free under the Income Tax Act 1961, while capital gains are taxable at redemption. 7. All three instruments are traded on the secondary market but often suffer from lower liquidity compared to the 10-year benchmark Central Government Security. Which of the following descriptions regarding the validity of these statements is correct?