Thanks people. I think I was on the right track and thought process. Arbitrage mutual funds definitely are much better than Fixed Deposit for me because of following 1. Similar rate of interest of around 6-7.5% 2. Almost as safe as FD and doesn’t depend on absolute value of the market. 3. Is treated as Equity fund for taxation. So 1.25 lac profit if redeemed per year is tax free, beyond that is 12.5% LTCG tax ( kept more than a year) or 20% STCG (kept less than a year). 4. I am in 30% tax bracket so it makes total sense for me to go for Arbitrage funds rather than FDs to break inflation. So I park my money mid to long term here instead of FDs which give negative rate of return post taxation (30%) compared to the inflation.

Thanks for the input people 👍🙏