This refers to the report "Will the gold for cash scheme pay off?" (June 4). The straight and honest answer is yes. Once upon a time, a review committee at the national level concluded that 'cooperation has failed, cooperation must succeed!' I have no reason to think that the move to unearth at least a part of the estimated domestic stock of over 20,000 tonnes of gold is just another game the government is playing. The move has in its background the need to reduce gold imports, the intention to account money being invested in gold and gold jewellery, and the noble objective of making a dead asset live and productive.
Celebrated economists and analysts have recently argued that after all, even if you succeed in making people deposit gold in banks, banks will have to 'import' gold when gold deposits mature. This argument does not hold good, as such an eventuality may not arise. Once a floating stock of a decent quantity of gold is built up and once the scheme becomes a reality, the continuous inflow of deposits will take care of the quantity of solid gold for meeting maturity liabilities (many may withdraw cash equivalent of gold, as they may need cash for other investment options or for meeting other needs).
Another aspect is lax law enforcement in regard to collection of tax or other levies. This is applicable to other commodities and even real estate and need to be taken care of by the government.
M G Warrier, Mumbai
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