How to make the gold monetisation scheme successful?

Abstract

Since times immemorial, India has been a leading consumer of gold in the world and the demand for gold in the country only seems to rise every year. The domestic production of gold in the country, however, has not risen in tandem resulting in the country becoming increasingly dependent on gold imports to meet demand. High level of gold imports results in a large Current Account Deficit, which is a pre-cursor to a Balance of Payment crisis. With this background, the Government of India launched the Gold Monetisation Scheme in 2015 to mobilise the gold lying idle in Indian households and put it to productive use in the economy. However, the scheme did not take off as expected, with total deposits under the scheme being less than 1% of the total under-the-pillow gold estimated to be present in the country. In this study, we have analysed the reasons for the subdued take-off of the scheme, and recommended policy interventions to make the scheme successful.