Why SGB ?

Why ?

Government is making this scheme to spread faster , Why?

Will the gold import deficit is more paining than the 2.5 % interest incured of around 650 crore per year for the estimated sale of 26,000 crore for the FY25?

Where will the 650 crore come from ?

If Money is printed for this purpose, the overall cumulative sum will exceed the gold import deficit ?

Facts,

According to provisional figures on India’s gold imports in August 2023, disclosed by a source familiar with the developments under the condition of anonymity, India’s gold imports surged to $4.9 billion, up from $3.5 billion in August 2022. This information was reported by Mint on September 14, 2023.

Interpretation,

The Government is implementing this scheme to spread faster aiming to control the trade deficit. The cost incurred by this scheme is significantly lower than the trade deficit caused by gold imports at present and for the foreseeable future.

Currently, the government’s decision is clear for the short term,considering the gold import deficit. However, in the long run, it has its own challenges for the government. If the government faces any challenges, Will the government consider announcing a policy similar to that of the U.S.A., involving the return of gold at a fixed price?

Only time will provide answers to these questions.

Note…

At present, Sovereign Gold Bonds (SGBs) appear to be a more favorable option for savers and investors. As time progresses, savers and investors must carefully analyze the data before making a decision, particularly in anticipation of any further announcements by the government regarding this matter.