The state-run trading firm MMTC has auctioned more than 9,000 Kgs of gold garnered under medium term and long term government deposit schemes of gold monetisation scheme.
The government has reaped in a bonanza of raising thousands of crores of rupees in liquid float in an added benefit of the gold monetisation scheme, which seeks to check import of the yellow metal into India and help prop up the country’s current account deficit.
The state-run trading firm MMTC has auctioned more than 9,000 Kgs of gold garnered under medium term and long term government deposit schemes of gold monetisation scheme, a finance ministry official close to the development told Financial Express Online.
The government had collected a total of 15,650 Kgs of gold under gold monetisation scheme as on 20 February 2019. It collected 6,584 kg gold under short term gold deposit scheme; 2,938 kg under medium term government deposit; and 6,128 kg under long term government deposit scheme, the official said.
Under the gold monetisation scheme, the government collects idle gold from the people for a fixed tenure, and pays them interest up to 2.5% and then returns the equivalent of the original deposit at the end of the tenure.
The government had launched gold monetisation scheme in September 2015 to mobilise the idle gold lying with households and institutions and reduce imports of the yellow metal. India is the second largest consumer of gold after China and huge gold imports put pressure on India’s current account deficit.
In the union budget 2018-19, the finance minister Arun Jaitley had announced complete revamp of gold monetisation scheme as the government failed to entice interest among households to put idle gold for productive use and earn interest by depositing it with the designated banks. However, according to the source there won’t be any tinkering with the policy till the new government comes.
“The government will formulate a comprehensive gold policy to develop gold as an asset class.
Gold monetisation scheme will be revamped to enable people to open a hassle-free gold account,” Arun Jaitley had said during the announcement of union budget for 2018-19.
Under gold monetisation scheme, one can deposit gold under short term deposit scheme for 1-3 years, medium-term deposit scheme of 5-7 years and long term deposit scheme for 12-15 years in return of interest in the range of 2.2-2.5%.
Besides gold monetisation scheme, there are two other gold schemes — sovereign gold bond scheme and Indian gold coin scheme, which was introduced as a part of gold monetisation scheme. Arun Jaitley, in his budget speech for 2018-19, had also talked about regulated gold exchanges in India.
“The government will also establish a system of consumer friendly and trade efficient system of regulated gold exchanges in the country,” said Arun Jaitley during his budget speech for 2018-19.