Finance Minister Arun Jaitley Saturday proposed steps to monetise the yellow metal by introducing a gold bond and a monetisation scheme besides announcing plans to make indigenous gold coins.
Presenting the Union Budget 2015-16 in the Lok Sabha, Jaitley said an estimated 20,000 tonnes of gold stocks in India were neither traded nor monetised.
The minister proposed to introduce the Gold Monetisation Scheme (GMS) which will replace both -- the existing gold deposit and gold metal loan schemes.
According to Jaitley, the new scheme will allow the depositors of gold to earn interest and the jewellers to obtain loans in their metal accounts.
"Banks and other dealers would also be able to monetise this gold," he said.
The finance minister also proposed a Sovereign Gold Bond (SGB) as an alternate financial asset to stop people from buying the precious metal physically.
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The bond will carry a fixed rate of interest, and also be redeemable in terms of the face value of the gold at the time of redemption by the holder of the bond.
Besides, the Centre is also coming out with an Indian gold coin with the Ashoka Chakra embossed on its face.
According to the minister, Indian consumers depend on foreign gold coins to meet their needs which results in Indian cash landing up in external markets.
"I propose to mint gold coins with the Ashoka Chakra which will help to recycle gold internally in India," he said.
India imports 800-1,000 tonnes of the yellow metal each year.
Industry body Gem and Jewellery Export Promotion Council (GJEPC) under the union commerce and industry ministry lauded the initiatives of the finance minister stating it'll boost the domestic gold segment, benefiting both consumers and investors.
"The dollar expenditure of the government will come down as a result of the SGB and GMS. If the schemes are implemented, it'll considerably clear the gold lying idle with people and temples," council's executive director Sabyasachi Ray told IANS over phone.
According to Ray, the country's homes and temples have an estimated Rs.47.25 lakh crore worth of the precious metal lying idle.
"By implementing the bond and the scheme, this huge amount can be mobilised," he said.
The association further said the indigenous gold coin will open up new avenues for the industry.
"Gold coins and bars account for 20 percent of the annual gold industry," he said.
Industry player Senco Gold also gave the thumbs up to GMS.
Company's executive director Suvankar Sen said the scheme was the "need of the hour".
"There is already lot of gold in the country. So the monetisation scheme will help the economy to mobilise the gold and reduce imports. As far as jewellers are concerned, gold will be freely available," he said.
Sen also predicted that the domestic prices of gold may come down as the nation can save a part of the $20 billion expenditure on its import.
"(It) will enable every common man to save some money while buying gold jewellery," he said.