New Delhi: In its first full budget proposed, the Narendra Modi government introduced gold deposit accounts to utilise the 20,000 tonnes available within the country and launched a sovereign gold bond. However, the government kept the import duty at the record 10 per cent in a setback for jewellers.
India is one of the largest consumers of gold in the world and imports as much as 800-1000 tonnes of gold each year. Though stocks of gold in India are estimated to be over 20,000 tonnes, most of this is neither traded, nor monetised. To change the practice Finance Minister Arun Jaitley proposed introduction of a Gold Monetisation Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes.
The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold.
In moving towards recycling of gold held in households and temple trusts for years, Jaitley signalled the government's intent to cut shipments into the world's top consumer of the metal. Massive gold imports often skew India's trade balance.
In the Budget development of an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold has been proposed. The bonds will carry a fixed rate of interest, and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the Bond.
The government will also commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face. Jaitley said, "Such an Indian Gold coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country."
The Finance Minister did not set a timeline for the new measures but said that the gold depositors will earn interest on their gold account, while jewellers can obtain loans on it. Banks and other dealers will be able to monetize the gold.
Comments
0 comment