Govt stares at high payouts as gold prices double over the last year

The first tranche of sovereign gold bonds will complete five years in November

The sharp rise in the prices of gold —which almost doubled over the past one year —has been the only good news for investors at a time when both equities and debt returns have been under pressure. However, the Union government could be starting at significant payouts in the second half of the year, an additional Rs 1,000 crore, if investors rush to redeem their holdings.

In November 2015, the government had launched Sovereign Gold Bonds (SGBs), with much fanfare, to attract money from gold investors. The basic idea was to reduce gold imports as it leads to unproductive foreign exchange