The government has released the Draft Outline for the Sovereign Gold Bond Scheme. The objective is to reduce investment demand for physical gold bars and coins which is estimated at around 300 tonnes per annum.
Key features
Sovereign Gold Bond Scheme
The Scheme, if successful, could bring about a sea change in the pattern of savings in India. But there are a number of issues which need to be addressed.
Concluding observation
The Sovereign Gold Bond Scheme has great potential but it is necessary to constructively tackle the problems in the scheme. Blind risk-taking should be avoided and dealt with, rather than deflecting the problems. The ideal solution would be to set up a Bullion Corporation as recommended by the K.U.B. Rao Working Group. The schemes currently pursued by the government are second best. With some modifications in the Draft Scheme, the Sovereign Gold Bond Scheme could be successful. Individuals should unhesitatingly invest in the Sovereign Gold Bond provided the interest rate is around 4 per cent.
(Syndicated)
