What is/are the purpose/purposes of Government's 'Sovereign Gold Bond

What is/are the purpose/purposes of Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

1. To bring the idle gold lying with Indian households into the economy
2. To promote FDI in the gold and jewellery sector
3. To reduce India’s dependence on gold imports

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1 only

2 and 3 only

1 and 3 only

1, 2 and 3

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC IAS – 2016

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Statement 1 is correct. Both the Sovereign Gold Bond Scheme (SGBS) and the Gold Monetization Scheme (GMS) aim to mobilize the large quantity of idle gold held by households and institutions in India, bringing it into the formal financial system. Statement 2 is incorrect. The schemes are primarily focused on domestic gold and reducing reliance on imports, not on promoting Foreign Direct Investment (FDI) in the gold and jewellery sector. Statement 3 is correct. By providing alternatives to holding physical gold and encouraging the use of domestic idle gold, the schemes aim to reduce the demand for gold imports, thereby helping to manage the current account deficit. Therefore, statements 1 and 3 correctly describe the purposes.

Sovereign Gold Bonds offer an alternative to holding physical gold, providing returns linked to gold prices plus an interest. The Gold Monetization Scheme allows individuals/institutions to deposit idle physical gold with banks, earn interest, and get principal and interest in gold or rupees.

The SGBS is a scheme where investors can buy bonds in denominations of grams of gold. These are issued by the Reserve Bank of India on behalf of the Government. The GMS aims to convert physical gold into deposit certificates. Both schemes are part of the government’s strategy to reduce reliance on gold imports and promote financial savings.

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