Government is considering a proposal for the setting up of a gold spot exchange under a comprehensive gold policy, a document on the implementation of 18-19 budget proposals stated. The document also stated that Broad guidelines for amendment of Gold Monetisation Scheme has been prepared and is under consideration.
While the new comprehensive gold policy has been discussed for quite a while, the government has, for the first time, formally stated that the gold monetisation scheme is being amended. The scheme announced in November 2015 to mobilise idle gold lying with Indian households has been a failure so far, with less than 20 tonnes being mopped up.
The finance ministry has been holding discussions on amending the scheme the past several months, but there has been no final word on the issue yet. However, interim budget proposals were well received by jewellers due to their possible impact on demand.
The Budget document states, “The Draft Policy for promotion of gold as a financial asset has been circulated to relevant ministries for comments and proposal for setting up of Gold Exchange is under consideration. Broad guidelines for amendment of the Gold Monetisation Scheme have been prepared and is under consideration”.
Surendra Mehta, National Secretary, Indian Bullion Jewellers Association, said, “Additional disposable income in the hands of the farmer and middle class will increase gold consumption.” He referred to several measures for rural areas, including cash transfer to farmers, which he felt will increase rural income and spur investments in gold.
Saurabh Gadgil, CMD, PNG Jewellers, said, “This budget indicates that the ministry feels it is time to clean and organise the gems and jewellery industry by introducing a comprehensive gold policy to develop gold as an asset class. Provisional guidelines are being drafted for a Gold Spot exchange, Gold Deposit account and Gold Monetization Scheme. We are hoping this budget will bring about the required confidence in the economy and benefit the industry in the long run.”
Jewellery exporters, however, are disappointed as their demands have not been met. Pramod Kumar Agrawal, Chairman, Gem and Jewellery Export Promotion Council said, “We hope that with the capital infused in the banking sector and banks coming out of PCA wil help in solving the shortage of working capital for our exporters. At the same time, we are disappointed that the demand for reduction in import duty of raw material like gold, silver, C&P diamonds and coloured gemstones were not included in the budget today.”