Central government's ambitious Gold Monetisation Scheme, failed to generate interest from the key target groups mainly on account of the lack of incentives to players like banks, refiners and the individuals -- a latest report by researchers from the Indian Institute of Management, Ahmedabad (IIM-A) revealed.

"The stakeholders in the ecosystem have differing viewpoints with respect to the sharing of responsibilities. A closer collaboration between all stakeholders is critical for the success of the Gold Monetization Scheme. This would necessitate suitable incentivization of all players, as well as appropriate mechanisms for risk sharing and/or risk mitigation," revealed the study "Gold Monetization in India as a Transformative Policy" jointly undertaken by institute's students Priya Narayanan, Balagopal Gopalkrishnan and Prof Arvind Sahay.

According to the research, Banks seek more control on the process to have a clear separation of risks or effective mitigation of risks relating to the operationalization of the policy.

Sharing the outcome of the research, Prof Sahay said, "It can be said that GMS has not been a successful policy. Our research has identified the areas of policy, which can be tweaked to make it more attractive for the key players of the scheme i.e. consumers, and bankers and refiners."

The study revealed that the diversity in the associations and attributions to gold across consumer groups, a one-size-fits-all policy does not work for consumers.

It is essential to segment consumers on the basis of attributes such as willingness to part with gold for investment purpose after identifying the characteristics of such consumers. This will allow for targeted communication and other forms of targeted intervention that are more likely to be effective rather than laying out a general scheme, revealed the study, which was funded by the India Gold Policy Centre (IPGC) an independent research body at IIM-A sponsored by the World Gold Council.

It was also observed from the study, which was conducted on a pan-India sample size of 1171 households across income-groups that the awareness level about the scheme and its benefits was limited even in the urban areas, leave alone the rural pockets. The researchers interviewed top executives of 6 banks, 5 refiners and an industry consultant.

"The government needs to act effectively in terms of communicating the merits of the scheme to the consumers, and to enable the stakeholders to work in tandem," it said.

The study noted that about 50 per cent of the respondents, who accumulate gold in small quantities do so for marriage of child or self. Around 60 per cent of respondents, indicating ingrained habit and planned accumulation. Almost 70 per cent respondents expressed clear reluctance to sell gold received as a gift.

"Rural consumers are more reluctant to part with gold as compared to urban consumers, but are also ready to pledge gold as collateral, with 74% of rural consumers being open to pledging their gold, suggesting “liquidity use” of gold on the basis of requirement," Sahay added.

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