India to Step up Measures to Control It's Physical Gold Demand
By GCRU Gold News on Wednesday, December 7 2016, 00:14 - Permalink
Since real estate and gold are the other places where people hoard black money, the government is expected to switch focus to them now. India’s physical gold hoard is estimated to be 20,000 tonnes and at current market price, this works out to be a massive Rs 60 lakh crore – four times the total value of the withdrawn Rs 500 and Rs 1,000 notes.
Here again, the path is very clear.The government wants to wean away people from physical gold and has already implemented liberal gold monetisation scheme and sovereign gold bond scheme. The gold monetisation scheme offers good interest and also waiver of capital gains tax on appreciation in the value of gold deposited. So, it makes sense to convert one’s gold hoard to these gold deposits, especially if it is held in bullion form. The sovereign gold bond scheme also offers the above mentioned facilities and is aimed at weaning away new gold investors from physical gold.
Why does the government want to wean away people from physical gold? Gold is one of the biggest items in our import bill and is draining precious foreign exchange. India is the second largest gold consumer in the world after China and any fall in imports can bring down its trade deficit.