“The decision has been taken after re-evaluating various factors, including investor demand, other investment products and uncertainties in the global economy, as the situation has changed since the interim Budget in February,” the official told ET on condition of anonymity.
Net issuances, after accounting for redemptions Sovereign Gold Bond The estimate for this financial year is now Rs 15,000 crore, much lower than the Rs 26,138 crore estimated in the interim budget and the revised estimate of Rs 25,352 crore for 2023-24.
Gold bonds lose their shine
Harish Galipelli, director, ILA Commodities India, attributed this shift to retail investors who are increasingly turning to stocks in anticipation of better returns. He also said that people are uncertain about the possibility of further growth in the future. Gold prices Savings are expected to increase in the short to medium term after the recent surge. Moreover, Galipelli pointed out that savings in rural areas have been affected by retail inflation and other factors.
Gold Bonds Gold monetisation schemes were introduced by the government in late 2015 to discourage physical purchases of the precious metal and reduce imports, thereby mitigating the negative impact on the current account deficit.
Gross collections through these two schemes are now estimated at Rs 20,030 crore in 2024-25, as against Rs 31,168 crore in the interim budget and Rs 28,240 crore (revised estimate) in the previous fiscal. Similarly, net collections are estimated at Rs 16,433 crore, down from Rs 27,571 crore in the interim budget and Rs 26,653 crore in the previous year. However, estimates for the gold monetisation scheme remain unchanged from the interim budget level.
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The Sovereign Gold Bond Scheme targets investors who view gold as an investment, and encourages them to buy it. Paper Gold In place of physical gold.
The gold monetisation scheme, on the other hand, aims to cash out idle gold held by households, temple trusts and others to increase domestic supply. Both schemes were designed to curb gold imports, which have been a significant contributor to India's current account deficit along with crude oil. Gold bond issuances had declined during the Covid-19 pandemic after reaching Rs 16,049 crore in 2020-21, before experiencing a surge in 2023-24.