Presenting the Union Budget on Saturday, Finance Minister Arun Jatiley said the government would introduce gold deposit schemes in a bid to curb imports of the yellow metal, a key contributor to the current account deficit of India, the top consumer of gold.
Over 20,000 tonnes of gold lies idle with Indian households without being traded or monetised. India does not produce gold and imports 800-1,000 tonnes of it every year, hurting the trade balance.
Indians mainly prefer to hold their gold in the form of ornaments, and the Finance Minister wants these to be put into productive use.
Mr. Jaitley said he planned to offer a gold monetisation scheme and a sovereign gold bond as an alternative to buying metal gold. He did not offer a time frame for them.
“The new scheme [gold monetisation] will allow the depositors of gold to earn interest in their metal accounts, and jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold,” he said.
On gold bonds, he said it would carry a fixed rate of interest and be redeemable in cash in terms of the face value of gold at the time of redemption.
The government will start work on developing an Indian gold coin, carrying the image of Ashok Chakra. “Such an Indian gold coin will help reduce the demand for coins minted outside India and help recycle the gold available in the country,” Mr. Jaitley said.
The government also kept the import duty on gold unchanged at 10 per cent.
