The government will adopt a “prudent debt management” strategy while deciding on launching new tranches of Sovereign Gold Bonds (SGBs) since the priority now is to lower the cost of borrowings, the finance ministry has said.
The last tranche of SGBs (Series IV 2023-24) was launched in February 2024. Since February 2024, the precious metal has seen its prices jump over 70%.
Replying to a query in the Rajya Sabha, Minister of State in the Ministry of Finance Pankaj Chaudhary said that the government’s endeavour is to minimise the cost of borrowings.
SGBs: Govt to ‘carefully consider’ cost of borrowings
“It is imperative for a prudent debt management strategy to carefully consider the above factor (lowering the cost of borrowings)” while deciding on offering new tranches of SGBs.
Considering the massive rise in gold prices over the last over 18 months, the government’s move to pause the scheme has proved productive.
Replying to one of the queries, the minister while referring to the World Gold Council’s report titled ‘Gold investment market and
financialisation’ published in July 2023 said that an estimated 23,000-25,000 tonnes of gold valued at USD 1.4 trillion is held with the households and religious institutions in India.
On being asked whether the Gold Monetization Scheme (GMS), launched in 2015, is a failure despite the fact that Indian households have a lot of gold, Chaudhary said that the decision on discontinuing the medium to long-term gold deposits was taken based on evolving market conditions.
GMS was launched with the objective to mobilise the gold held by households and institutions for productive use, the government said. “However, due to evolving market conditions including increasing prices of gold, which resulted in increasing cost to the government, the government decided to continue the Short-Term Gold Deposits (STGD) component of GMS, while Medium- and Long-Term Gold Deposits (MLTGD) under GMS were discontinued, from 26.03.2025. The total mobilisation under GMS (MLTGD + STGD) up to March 2025 has been 37.81 tonnes,” the minister’s written reply in the Rajya Sabha said.
Gelo-political tensions globally led to rise in gold prices: Govt
When asked if the SGB was a failure, the government said that several factors, including global geopolitical situations, led to higher gold prices, resulting in inflated borrowings for the central exchequer.
Chaudhary in his reply said that the SGB was brought to help reduce the demand for physical gold. The government mobilises resources through various modes including G-Securities, Treasury Bills, SGBs, etc, he added. “A decision on the mode of mobilizing resources is taken after due consideration of the relative costs to the government. The recent global geo-political unrest has impacted gold prices significantly, increasing the cost of borrowing through SGBs.”
“As of March 31, 2025, the SGB scheme garnered subscription of about 146.96 tonnes of gold amounting to about Rs 72,275 crore through 67 different tranches. Against this, 18.81 tonnes of SGB subscription has already been redeemed till June 15, 2025,” Parliament was informed.