In an effort to put to productive use the gold lying idle with households and trusts, State Bank of India has mobilised 13,212 kg gold through the Gold Monetisation Scheme (GMS). SBI collected 3,973 kg of gold in the last financial year under the GMS programme, launched by the Narendra Modi-government to utilise gold lying idle with individuals as well as trusts, according to SBI’s annual report. With the collection of the last fiscal, the total gold reserves of SBI has crossed over 13,000 kg. Prime Minister Narendra Modi launched the GMS in November 2015 to cut India’s import bill and use the idle lying gold for productive purposes.
Indian households reportedly have over 20,000 tonnes of gold lying idle. To use this vast treasure, instead of importing, the government had also increased the import duty on the yellow metal to 12.5 per cent in the Budget of FY20. The government aimed to narrow its current account gap with a cut in gold imports.
To give a fillip to the gold investments, the government had also introduced sovereign gold bonds, which are government securities denominated in grams of gold. The SGB provided gold buyers with a substitute for holding physical gold as investors were shielded from the risks and costs of storage and were free from issues like making charges and purity in the case of gold in jewellery form. SBI added that it mobilised 647 kg gold through sovereign gold bonds in the last fiscal.
Meanwhile, the ongoing economic crisis in India has severely hit the gems and jewellery industry. Despite being one of the largest gold importers in the world, India did not import nearly any gold in the month of April. India’s gold imports plunged 99.9 per cent on-year in April to their lowest in nearly three decades. Restriction on the movement of goods and the nationwide lockdown leading to the closure of jewellery shops were attributed to the near-nil gold imports. Even as India is the second-largest consumer of gold, it imported only 50 kg of gold, compared to 110.18 tonnes a year ago.