Gold monetisation scheme:When Prime Minister Narendra Modi appealed to citizens of India to stop buying gold for a year, debates and concerns have grown over the feasibility and impact of the advice. While it is seen as a key measure to halt India’s forex outflow, which has dropped substantially in recent times after the fallout of the Iran-US war, jewellery industry bodies have raised concerns over it as it due to large-scale negative ramifications.
The gems and jewellery bodies plan to make representations to Prime Minister Narendra Modi seeking implementation of the Gold Monetisation Scheme after his Sunday appeal to people not to buy gold for a year, in a bid to strengthen the Indian economy.
The Gold Monetisation Scheme (GMS) allows individuals, trusts, and institutions to deposit idle gold with banks and earn interest, with both interest and capital gains fully tax-exempt.
PM Modi Coal Gasification Scheme
The All India Jewellers & Goldsmith Federation (AIJGF) said it could threaten the livelihoods of 35 million people.With this precarious situation, when India can’t afford to lose more forex reserve over gold import, while the livelihood of hundreds of thousands of people is dependent on it, some are pitching to find a middle path with a gold monetization scheme.
Rising from the ashes, gold monetization scheme, launched in 2015, is now looking like an alternative option, balancing the act of hindering gold import and unlocking the value of idle gold.President of Indian Bullion and Jewellers Association, Gujarat, Nainesh Pachhigar said the GMS can be implemented with the cooperation of jewellery manufacturers and showroom owners.
“We will make suggestions to the PMO in coming days and appeal to PM Narendra Modi on the issue. The restrictions should be on bullion imports as over 1.50 lakhs to 2 lakhs workers in the jewellery sector will be affected (if people stop buying gold).
What Is Gold Monetisation Scheme?
The scheme aims to mobilise idle gold held by households and institutions of the country and facilitate its use for productive purposes, and in the long run, to reduce country’s reliance on the import of gold.
It comprised two scheme ‘Gold Deposit Scheme’ and Gold Metal Loan’ scheme.
It was seen as a champion attempt to unlock gold’s value, but it failed to lure customers. It attracted only a tiny fraction of 39 tonnes of gold deposits compared to the estimated 34,000 tonnes of gold held by Indian households.
Some of the parts of the scheme were discontinued after a decade of operation. However, when things are going south, industry bodies from gems and jewellery sector are now planning to request the government to revive and strengthen the Gold Monetisation Scheme, according to Moneycontrol report.
India’s gold import rose sharply by 24 per cent in FY26, costing the country about $72 billion in foreign exchange.
Read More-PM Modi WFH News
How Does Gold Deposit Scheme Work?
Under the scheme, consumers can deposit their gold at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS) and can get deposit certificates in equivalent of 995 fineness of gold.
They earn interest on their gold deposit for the short-term period which is decided by banks on the basis of the prevailing international lease rates, other costs, market conditions etc. The interest is borne by banks.
For the medium and long-term deposits, the rate of interest is decided by the government, in consultation with the RBI from time to time and the same is borne by the Central Govt.
The designated banks (ICICI Bank, Corporation Bank/Union Bank of India, Indian Overseas Bank, Punjab National Bank, State Bank of India, HDFC Bank, Yes Bank, Dena Bank/Bank of Baroda) accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes (MLTGD).