The Budget proposals of gold monetisation schemes and minting of gold coins with the Ashoka figure are good ideas, according to jewellers and gold NBFCs. However, many feel that while the intention was good, the effectiveness of the proposals would depend on how the government plans to implement them.

They pointed out that such schemes in the past had failed mainly because they were not very practical.

VNM Ravi, member of the governing body of the All-India Gem and Jewellery Federation, told BusinessLine that both the schemes would help monetisation of gold, a huge quantity of which was lying idle or hoarded by individuals and families.

The gold bonds would help bring this out and join the economy. However, this would depend how effective and investor-friendly would be the scheme when it would be implemented. “The bond scheme should be pragmatic, effective and should be attractive enough,” he said. The previous monetisation schemes, implemented through banks, were not at all attractive to those who held gold. The plan of issuing gold coins with the Ashoka Chakra on them was a good idea too. This would give the coins the near-status of legal tender, Ravi noted. TS Kalyanaraman, Chairman and Managing Director, Kalyan Jewellers, said that the proposed gold coins with the Ashoka Chakra will encourage recycling of gold among domestic consumers and give a fillip to Make in India.

According to him, the acknowledgment of gold consumption with the introduction of the gold monetisation scheme is an encouraging initiative and it will help convert the physical asset to a liquid financial asset. The resolve of the Government to discourage cash-based transactions augurs well. However, the implementation will have to be in a phased manner considering the fact that a significant class of consumers of gold and jewellery, especially in rural areas, may not have a PAN card and are yet to be integrated into the banking network. 

George Alexander Muthoot, MD of Muthoot Finance, said the gold NBFCs were already helping monetisation by giving loans against gold jewellery.