At the current retail gold rate, this is equivalent of 85 tonnes of the precious metal, representing 11% of the country’s demand for the precious metal in the 2022 calendar year.
“They (net mop-up) stood at ₹50,216 crore as of December 2022, against ₹42,507 crore a year earlier,” a senior finance ministry official said.
The government had in November 2015 launched sovereign gold bonds and a gold monetisation scheme.
The sovereign gold bond scheme was targeted at those looking at gold as an investment – helping them buy paper gold instead of physical gold. The gold monetisation scheme sought to bring out idle gold with households, temple trusts and others to raise domestic supply.
Both were intended to curb gold imports, which, together with crude oil, are a big contributor to India‘s current account deficit. “Sovereign gold bonds have become popular and accounted for much of these collections. The monetisation scheme, despite improvement in recent years, will take some more time to be popular,” the official told ET.
Having scaled a peak of ₹16,049 crore in the pandemic year of FY21, gold bond issuances have since moderated as investors preferred more attractive equity investments. The net issuances of sovereign gold bonds (after factoring in redemption) eased to about ₹11,700 crore in FY23 from ₹12,808 crore in the previous year. It could drop further to ₹9,700 crore in FY24 against gross issuances of ₹11,200 crore.
The bond redemptions are expected to rise five times in FY24 to ₹1,500 crore, as investors may take advantage of the elevated gold prices once the initial five-year lock-in period is over for many of them, according to analysts.
The net mop-up under the monetisation scheme is estimated to have eased to ₹730 crore in FY23 from ₹1,390 crore a year before, said the official. It’s expected to touch ₹813 crore in the current fiscal year.