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PM Modi's Plan To Unlock Gold Gets New Focus With Widening Trade Gap
PM Modi's plan to unlock gold gets new focus with trade gap near record India's wide trade deficit is highlighting a curious government plan to rein in the gap: Getting people to hand over their private stashes of gold jewelry. “If you can recycle the existing gold back home, then reliance on gold imports comes down and it will reduce pressure on the current account deficit,” said Madhavi Arora, lead economist with Emkay Global Financial Services Ltd. “And you can also monetize the gold as an instrument to raise funds.” But a drop in global prices offset the impact. Generational Value Most Indians, like Aditi Das, are happy to pay a bank to safeguard their ornaments in lockers rather than earn interest by depositing it at the same bank under the government program. There needs to be flexibility in how long the gold is deposited for and there should be “no questions asked” about proof of purchase up to a certain limit, as it is often difficult for people who have inherited gold to prove ownership, Pethe said. The deposit plan and a related sovereign gold bond scheme, which allows an investor to buy a bond priced at the value of gold without an underlying physical asset, are a “far cry from success,” representing less than 2% of India's annual gold consumption, according to Emkay's Arora. Source: NDTV
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