Govt to monetise gold, curb imports

Girja Shankar Kaura

Tribune News Service

New Delhi, February 28

In a bid to curb gold imports and monetise large idle stocks of the precious metal, Finance Minister Arun Jaitley today announced three schemes, including redeemable gold bonds which will carry a fixed rate of interest besides announcing plans to make indigenous gold coins.

Presenting the Union Budget 2015-16, Jaitley said an estimated 20,000 tonne of gold stocks in India were neither traded nor monetised and added that the government plans to introduce a gold monetisation scheme, which will replace both the present gold deposit and gold metal loan schemes.

According to Jaitley, the new scheme will allow the depositors of gold to earn interest and jewellers to obtain loans in their metal accounts. “Banks and other dealers will also be able to monetise this gold,” he said in his maiden full-year Budget speech.

India is one of the largest consumers of gold in the world and imports 800-1000 tonne metal every year. Jaitley also proposed a Sovereign Gold Bond (SGB) as an alternative financial asset to stop people from buying the metal physically.

The bond will carry a fixed rate of interest, and also be redeemable in terms of the face value of the gold at the time of redemption by the holder of the bond. The move would also help in containing trade deficit and current account deficit, the net difference between outflows and inflows of foreign currencies.

Besides, the Centre is also coming out with an Indian gold coin with the Ashoka Chakra embossed on its face. According to the minister, Indian consumers depend on foreign gold coins to meet their needs which results in Indian cash landing up in external markets.