WITH Budget 2015-16 unveiling plans to tap over 20,000 tonne of gold stocks in the country, Indian housewives, the world’s largest hoarders of the metal, will have reasons to let go of their holdings and show off sovereign gold coins adorned with the Ashok Chakra.
The finance minister on Saturday proposed to introduce fresh gold deposit accounts by banks, to launch a sovereign gold bond and to bring in India gold coins — aimed at curbing bullion imports to contain its debilitating impact on trade deficit. However, he retained the import duty on gold at 10% despite heightened expectations of a tax cut in the build-up to the Budget, much to the consternation of the bullion industry.
He said the proposed gold monetisation scheme will replace both the present gold deposit and gold metal loan schemes. It will allow depositors to earn interest and jewellers to obtain loans in their metal account.
The extant gold deposit scheme offered by banks has been a failure as the minimum quantity for deposits by an individual or temple trusts is as high as 500 grams, which effectively leaves out more than 95% Indians.
Jailtley also proposed to “develop an alternate financial asset, a sovereign gold bond, as an alternative to purchasing metal gold”. The bonds would carry a fixed rate of interest and can be redeemed by the holder in cash in terms of the face value of gold at the time of redemption. Analysts said although there is no clarity regarding the platform on which this bond would be floated, the move would create more opportunities to hedge in gold.
The Indian Gold Coin would curb imports of sovereign coins minted outside the country and also help recycle the precious metal available in the country, the minister said.
Hailing the move, Somasundaram PR, managing director (India), World Gold Council, said: “The policy announcements are a step towards making gold a part of the larger financial system and a fungible asset class… but this can be realised only if trade is liberalised without artificial curbs through higher duties and other forms.”
