G-secs

G-secs are a short form for Government securities that are issued by the government to finance its fiscal deficit. The government collects taxes from its citizens which is the primary source of revenue for the government. On the other hand, the government also spends on things like healthcare, education, defence and infrastructure. These expenses are funded by the taxes it collects from us. But when the expenses exceed the revenue it results in a fiscal deficit. In such a case, the government issues various kinds of debt securities to raise money from investors and use this money to finance its expenses. Debt securities issued by the Government are called G-secs.

G-secs are a debt obligation of the Government that promises to pay its holders (G-sec investors) a fixed or floating interest rate at periodic intervals and the initial invested amount or principal at the time of maturity. Since G-secs are issued by the government, they are considered safe as far as default risk is concerned i.e. the chances of the borrower or issuer (the Government in this case) failing to pay its obligations is remote.

G-secs with less than one-year maturity are called T-bills or Treasury bills and those with more than one year of maturity are referred to as Government bonds.