Prime Minister Narendra Modi launched the scheme on November 5, along with sovereign gold bonds and coins, to mobilize an estimated 22,000 tonnes of idle gold lying in family lockers and temples and put them into productive use.
“The gold monetization scheme is meant for certain select segments that are actually storing a lot of gold…we have temple trusts and we have other institutions which are using a lot of gold for financial savings, and those are the people who we think will take up the offer,” minister of state for finance Jayant Sinha told HT in an interview.
So far, the gold monetization scheme has fetched only about 400 grams, even though earnings from it would be exempt from capital gains, wealth and income taxes.
According to estimates, about 3,000 tonnes of gold are lying idle in the country’s temples. Things could turn interesting for temples whose presiding deity is a minor. The Supreme Court is looking into whether a minor, even if a temple deity, can own property.
Sinha said that the monetization scheme was not really aimed at households. “Temple trusts are quite interested… They will analyze it. We expect them to take some time… Our expectation was never that tonnes of gold will start coming in from the beginning.”
He, however, said infrastructure needed to be put in place to make the gold monetization scheme work. “We have to put up the infrastructure to assure them that they get the right value for their gold, the mechanics and logistics are complicated.” The intent was never that people will come with their jewellery and have it melted.
Under the gold monetization scheme, resident Indians, individuals or trusts including mutual funds, exchange-traded funds registered under Sebi and temples among others, can deposit their idle gold, bullion and jewellery, in banks and earn an interest.
The mobilized gold will also supplement the Reserve Bank of India’s gold reserves and will help in reducing the government’s borrowing cost. Sinha also said that the sovereign gold bond “is moving along well.” According to official estimates, Indians buy about 300 tonnes of gold bars every year purely as an investment asset.
India imports an average 1,000 tonnes of gold each year, which widens the country’s current account deficit — the difference between inflow and outflow of foreign currency.