To what extent, the Gold Monetization Scheme has been able to reduce the craze for physical gold in India? Critically discuss the success or failure of this scheme.
So far, the response to the scheme seems to have been largely failed and it has led to deposits worth only 6,410 kg of gold since it was launched, less than 2% of the annual imports of the gold in 2016. Gold imports still account for more than one-fourth of India’s trade deficit and the country remains the largest importer of gold in the world
Some of the reasons of the failure
- Lack of adequate information or understanding about the gold monetization scheme
- Nearly three-fourth of India’s gold stock in held in the form of jewellery and carries a lot of sentimental value.
There is also a gender aspect to it, as gold in the form of jewellery allows women some sort of control over ownership and inheritance. Given this aspect, many households might prefer private schemes, which allow them to get back the gold in form of jewellery as opposed to the government’s scheme which offers cash or solid gold.