Growing with gold schemes
Apropos to editorial “Golden panacea” (FE, September 10), at a time when the economy is facing slow growth, the introduction of the gold monetisation and gold bond schemes will certainly make a positive impact on India’s foreign exchange reserves as well as on its current account deficit, which will support speedy revival in investment. Greater significance needs to be attached to making the schemes viable and feasible to attract investors. While government should look for strict compliance of the KYC norms, it has to be particular in ensuring full clarity and transparency on the applicable tax laws on the sources of the gold and ornaments of the tenderer in order to prevent the taxman harassing her at a later date. Second, the tenure of the deposit and interest rates need to be attractive and similar to other types of bank deposits to compensate the depositors for the likely loss of the making-charges incurred on the ornaments. Third, the banking regulator must permit banks to consider the balance of gold held with them for CRR and SLR purposes to augment resources for lending and improve profit margins. The proposed gold bond scheme needs to be more attractive in terms of rates and its periodicity of payment, as well as in terms of easy liquidity to divert people from investing in gold. In addition to the dematerialised form, bonds should also be made available in physical format to reduce the cost of opening and maintaining demat accounts. To ensure maximum liquidity, loans against gold bonds must be made available with the interest nominally higher than that payable on the bonds, at nominal margin. Abundant publicity is needed to popularise both the schemes to drastically reduce the import of gold and speed up economic growth.
VSK Pillai, Kottayam
The real test for the JD(U)-RJD-Congress “secular” alliance will come if the conglomerate succeeds in securing a majority, with the RJD getting more MLAs elected than those of the JD(U). Lalu’s confidantes will then try to extract their pound of flesh by staking claim to plum cabinet posts in Bihar. Indirectly controlled by Lalu, they will create all sorts of troubles for CM Nitish Kumar. A couple of the former chief minister’s family members may even insist on sensitive portfolios like home and finance. That can make Lalu the de-facto CM of Bihar till his six-years disqualification comes to an end.
Vineet Phadtare, Mumbai