Quick Verdict
Myth. Government bonds may have very low default risk, but their prices can still fall.
Why People Believe It
Because the government stands behind these bonds, it is easy to think you cannot lose money by buying them.
Reality Check
Indian central government bonds are generally considered very unlikely to default on payments in rupees. But if you sell a fixed-rate bond before it matures, you may get less than you paid for it. This often happens when market interest rates rise, making older bonds less attractive. Even if you hold the bond until maturity and receive the promised payments, inflation can reduce what that money will buy. Not all government-backed products follow the same rules.
A Better Rule
Check when the bond matures and whether you may need the money earlier. Government backing does not remove every kind of risk.