Gold monetisation scheme must be made attractive, says expert
Gold monetisation scheme will prove beneficial in the long run if it is implemented properly, says an expert. The Finance Ministry has already prepared the draft of the monetisation scheme aimed at recycling of idle gold in the form of household jewellery. The government has also sought recommendations from all stake holders for effective implementation of the scheme. Experts believe that the proposed scheme will be a win-win situation for all the stake holders including consumers, traders and the government. “Give some time for the consumer to get familiar, for banks to get familiar, build infrastructure; and in a couple of years when you turn around, you will find that this is a very robust way of creating charm, creating value for gold,” Somasundaram P R, Managing Director of World Gold Council-India, told reporters at an event last week. He suggested the government to offer incentives for those opting for the monetisation so as to make the scheme more attractive. World Gold Council in its report on Indian hallmarking system said: “Designed to encourage gold owners to deposit jewellery and coins with banks, the scheme is intended to reduce India’s dependence on imported gold and thereby on foreign reserves.” India has a gold stock of around 22,000 tonnes but just 600 tonnes is monetised through loans and around 10 tonnes has been deposited at banks under the existing gold deposit scheme. “This needs to change if gold monetisation is to become effective,” the WGC report said, adding that concerns about the quality of gold held by both consumers and other institutions are hampering the change. About the impact of the possible interest rate hike by the US Federal Reserve on gold price, Somasundaram said that there is no co-relation between the two. “It’s not which has direct co-relation… Interest rates have gone up over the years and gold prices have also gone up. In short term, there is a talk about fed rate hike and therefore its impact on dollar price. But you have to see its impact on other asset class,” he had said while talking to reporters. The monetisation schme will also keep a check on India’s gold import. “Designed to encourage gold owners to deposit jewellery and coins with banks, the scheme is intended to reduce India’s dependence on imported gold and thereby on foreign reserves,” the WGC said in its report.
August 03, 2015 | 6:19 pm IST.
to success.