Before Dhanteras, to be exact. In an effort to reduce expensive gold imports, India’s government will soon introduce important gold-related programmes that will entice individuals with gold into a bank deposit system to monetize the gold.
How does it work? Basically, people would be able to put their gold into banks. What do they get in return? Interest payments on gold that would otherwise be sitting idly in their households. The Prime Minister Narendra Modi expressed confidence that this scheme will improve economic development.
Out of the 1,000 tonnes of gold that India consumes each year, most of it is imported – making gold the second biggest expense on the import bill after oil.
Dhanteras is the first day of the five day Diwali festival as celebrated in India, and it is during this time that gold is considered a highly favoured purchase.
The country’s record account deficit of $190 billion in 2013 was largely blamed on huge imports of gold, which sparked increased duty on imports of gold to an all time high of 10 percent.
According to Modi, there are two benefits of the scheme to the individual – security and interest. “Nobody will come to steal” says Modi, and gold will now become a live asset instead of a dead one.
There is also the Gold Bonds Scheme, in which people will receive a piece of paper which will have the same value as that of the gold. “When you return with the piece of paper, you will get money as per the value of gold at that time,” said Modi.
Modi encourages the people of India to not let their gold lie idle at home, but to put it to use for the benefit of the country and themselves.