Gold Monetisation Scheme (GMS) in India
India has approximately 22,000 tonnes of gold in households, equivalent to 26 years of gold imports. To leverage this gold and decrease import dependency, gold trade bodies have proposed enhancements to the Gold Monetisation Scheme (GMS) to the government.
Proposed Enhancements
- Flexible Tenures: Encourage banks to offer varied tenures for gold deposits to meet diverse depositor needs.
- Higher Interest Rates: Increase rates to make the scheme more appealing.
- Tax Exemption: Assure no tax enquiries for up to 500 grams of ancestral gold deposits.
Current Situation
- India's gold imports reached a record $47 billion in the first 11 months of 2024, exceeding $42.6 billion in 2023.
- Gold prices have surged to historic highs, with physical market prices at ₹77,908 per 10 gm.
- Current GMS participation remains low due to procedural and trust issues, despite the potential of mobilizing 22,000 tonnes of gold.
Participation & Challenges
- Recognition of reputed retail jewellers to promote customer participation.
- Current rules stipulate a minimum deposit of 10 grams of raw gold, with no maximum limit.
- Terms for deposits:
- Short-term: 1-3 years
- Mid-term: 5-7 years (2.25% interest)
- Long-term: 12-15 years (2.5% interest)
- The interest rate for short-term deposits is decided by the respective bank.
