The recent news about Sovereign Gold Bonds (SGBs) delivering a staggering 303% return for the 2017-18 Series-V bondholders is certainly a testament to gold's enduring value and a welcome outcome for many investors Can I still invest in the Sovereign Gold Bond (SGB) scheme ?. It is fulfilling to see such gains, especially when I have long advocated for gold as a strategic asset.
However, this success comes with a bittersweet note: the primary issuance of SGBs has been discontinued. Finance Minister Nirmala Sitharaman (nirmala@svpnpa.gov.in) confirmed this during a post-budget briefing for the Union Budget 2025, citing the increasing cost to the government due to rising gold prices at the time of redemption Can I still invest in the Sovereign Gold Bond (SGB) scheme ?. While existing bonds remain active, new subscriptions are halted, pushing investors to the secondary market.
This development takes me back to my reflections years ago, particularly when the Gold Monetisation Scheme was being debated. In my 2018 blog, "Gold can finance Infrastructure" Gold can finance Infrastructure, I had discussed the scheme, referencing Shri Arun Jaitleyji's budget speech and a meeting involving Economic Affairs Secretary Shaktikant Das. My core argument was always about harnessing India's vast idle gold reserves to finance crucial infrastructure, thereby reducing our reliance on foreign debt.
I had highlighted the challenges then: the emotional attachment to physical gold and the reluctance of people to disclose its source. My suggestion was to make the scheme more attractive by calculating a current value for deposited gold, returning that value with a simple interest, crediting the amount as "Advance Tax" to offset future tax liabilities, and most importantly, removing the requirement to disclose the source of gold. I believed this would encourage significant participation, potentially garnering thousands of tons of gold.
The core idea I wanted to convey then, and which still rings true today, is this — take a moment to notice that I had brought up this thought or suggestion on the topic years ago. I had already predicted this outcome or challenge of mobilizing gold, and I had even proposed a solution at the time to make such schemes more viable and appealing for the masses. Now, seeing how things have unfolded with the discontinuation of primary SGB issuance due to the government having to pay higher amounts, it's striking how relevant that earlier insight still is. Reflecting on it today, I feel a sense of validation and also a renewed urgency to revisit those earlier ideas, because they clearly hold value in the current context.
I had also urged Madam Sitharaman (nirmala@svpnpa.gov.in) in 2017 to consider alternatives to building a huge pile of foreign debt for infrastructure projects Economists and Laymen. The current situation with SGBs, while successful for investors, underscores the government's challenge in managing such initiatives without significant financial outflow. My vision of converting our domestic gold, which often lies idle, into a powerful engine for national development remains as pertinent as ever. Perhaps by revisiting some of those fundamental suggestions, we can find a sustainable path forward that truly leverages our internal wealth.
Regards,
Hemen Parekh
Of course, if you wish, you can debate this topic with my Virtual Avatar at : hemenparekh.ai
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