Prime Minister Narendra Modi today launched three gold schemes, including a gold monetization scheme, to lure tonnes of gold from households into the banking system. It is aimed at cutting imports.
Under the scheme, banks will collect gold for up to 15 years to auction them off or lend to jewelers from time to time. They will pay 2.25-2.50 per cent interest a year, higher than previous rates of around 1 per cent.
The country has amassed about 20,000 tonnes of gold worth over $800 billion (Rs.52.40 lakh crore) in family lockers and temples and previous attempts at mobilising this gold have been unsuccessful.
"20,000 tonnes of gold is just lying unused. That is the reason we are poor," PM Modi said today and added, "If we make some effort in the right direction, we can be free of this tag."
People can deposit a minimum 30 grams of raw gold - bars, coins, jewellery excluding stones and other metals. There is no maximum limit for deposits under the scheme.
A Gold Sovereign Bond Scheme also launched today offers 2.75 per cent interest to domestic investors to cut physical buying. Interest on gold bonds, which can be used as collateral for loans, will be payable every six months.
PM also unveiled a gold coin with the Ashok Chakra engraved on one side. These gold coins weigh five or 10 grams. A 20-gram gold bar will also be available for purchase.
Industry experts and bankers say many prospective depositors may not take up the monetization scheme due to concerns that the tax department could question the source of gold.
Investors will have to disclose their permanent account number, registered with the income tax department, if the value of gold is worth more than Rs. 50,000. Some people fear it is a way for the government to keep a tab on the source.
Another concern is the likely loss of 20-30 per cent of the weight of jewellery as it is melted at certified centres at the cost of the depositor. Also, say experts, some people may find conventional bank deposit rates of 8 per cent more attractive.
Huge gold imports pushed India's current account deficit to a record $190 billion (Rs. 12.48 lakh crore) in 2013, prompting the government to hike its duty on imports to a record 10 per cent. Imports fell to an estimated $34 billion (Rs. 2.23 lakh crore) in 2014-15, but PM Modi is looking to cut that further.
