By the Press Trust of India
via The Hindu, Chennai
Saturday, February 28, 2015
http://www.thehindu.com/business/budget/union...proposes-ste...
To curb gold imports and monetise large idle stocks of the precious metal,
Finance Minister Arun Jaitley today announced three schemes, including
redeemable gold bonds which will carry a fixed rate of interest.
The minister proposes to introduce a gold monetisation scheme, which will
replace both the present gold deposit and gold metal loan schemes.
"The new scheme will allow the depositors of gold to earn interest in
their metal accounts and the jewellers to obtain loans in their metal
account. Banks and other dealers would also be able to monetize this
gold," Mr. Jaitley said in his budget speech. ...
India is one of the largest consumers of gold in the world and imports as
much as 800-1,000 tonnes of gold each year.
Though stocks of gold in India are estimated to be over 20,000 tonnes,
mostly this gold is neither traded nor monetised, the Finance Minister said.
He also proposed to develop an alternate financial asset, a sovereign gold
bond, as an alternative to purchasing metal gold.
"The bonds will carry a fixed rate of interest and also be redeemable
in cash in terms of the face value of the gold, at the time of redemption by
the holder of the bond," he said.
The move would also help in containing trade deficit and current account
deficit (CAD), the net difference between outflows and inflows of foreign
currencies. It had peaked to 6.7 per cent of GDP in the third quarter of
2012-13.
He added that the government would commence work on developing an Indian
gold coin, which will carry the Ashok Chakra on its face.
The coin would help reduce the demand for coins minted outside India and
also help to recycle the gold available in the country, he added.
As per the Economic Survey, the CAD is expected to fall below 1 per cent
in the next fiscal on the back of easing of global commodity prices including
petroleum products.
Gold imports in January has declined to 38 tonnes from 142 tonnes in April
2014. In 2012-13, the country had imported 845 tonnes.
Reduction in gold imports has brought down the trade deficit to $118.37
billion during April-January this fiscal.
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