How to make the gold monetisation scheme successful

Abstract

Since times immemorial, India has been a leading consumer of gold in the world with an ever-increasing demand for the metal. However, due to a shortage of domestic gold, the country has largely been dependent on gold imports to meet this demand, resulting in large current account deficits. In 2015, the Government launched the Gold Monetisation Scheme (GMS), a substantial modification of the erstwhile Gold Deposit Scheme and Gold Metal Loan Scheme to mobilise gold in Indian households and historical gold reserves lying with religious institutions like temples. Nevertheless, Government sources confirm that only 3.1 tonnes have been mobilised successfully under GMS until July 2016, which is abysmally low compared to the amount of gold estimated to be lying idle in households. Through a literature survey, field visits and structured interviews with multiple stakeholders, this study attempts to identify and analyse the challenges that inhibit the scheme from realising its full potential. The study concludes with recommendations to enhance adoption of the scheme by both households and temples.