Even as the Prime Minister Narendra Modi has announced rolling out the Gold Monetisation Scheme around Diwali, experts at the Indian Institute of Management-Ahmedabad (IIMA)’s India Gold Policy Centre (IGPC) see the scheme bringing down India’s import bill as well as global prices of gold, besides curbing smuggling.

At a workshop held on Tuesday, key stakeholders, including eminent bankers, leaders from NBFCs, hallmarking agencies, jewellers, gold refiners, trusts, bullion traders, bullion logistics companies, assaying centres, commodity investors, traders, academicians, and economists expressed their views.

The discussions at the workshop will be presented as a white paper to the Government of India as an on-ground feedback on the two schemes on gold monetisation approved by the Union Cabinet last month.

Saurabh Garg, Joint Secretary (Investment), Department of Economic Affairs, Ministry of Finance said, “The objective of launching the gold monetisation schemes is to mobilise the gold held by households and institutions and mainstream these savings into the financial system so that they are put to productive use.”

Turkey, a role model Internationally, Turkey has been known to have monetised its gold most successfully. Erkan Kilimci, Executive Director, Central Bank of the Republic of Turkey (CBRT), mentioned about the similarities between Indians and the Turkish for their preference of physical gold as a traditional investment.

Also, a sustained high level of inflation induced households to purchase gold in Turkey. But once CBRT allowed banks to hold a fraction of their reserve requirements, for currency liabilities, in gold and foreign exchange, the banks offered innovative gold deposit accounts to households to unlock their gold. Gold deposit accounts increased substantially by pulling physical gold into the financial system.

The Union Cabinet had approved Gold Monetisation Scheme and Sovereign Gold Bonds Scheme in an attempt to mobilise gold held by households and institutions such as temple trusts, etc., to help reduce import bill. After crude oil, gold is the second major item in the imports list.

Gold imports rising India is the biggest buyer of gold in the world and imported gold worth $34 billion in the fiscal 2014-15. The first five months of the current fiscal year have witnessed gold imports increasing compared to the same period last year.

IGPC is a part of IIM-A and is sponsored by World Gold Council. It is a centre of excellence, conducting cutting-edge applied research on the gold industry in India and providing insights to suggest ways at both policy as well as execution levels.

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