Context:
The jewellery industry has called for strengthening the Gold Monetisation Scheme (GMS) to mobilise idle household gold and reduce India’s dependence on gold imports. The proposal comes amid concerns regarding pressure on foreign exchange reserves and rising gold imports.
- India is one of the world’s largest importers and consumers of gold, leading to significant pressure on the Current Account Deficit (CAD) and foreign exchange reserves.
- Gold Monetisation Scheme (GMS) was launched in 2015 to mobilise idle gold lying with households and institutions into the formal financial system.
- Under GMS, individuals can deposit gold with authorised banks and earn interest on the deposited gold.
- The scheme aims to reduce dependence on imported gold, improve gold recycling and channel domestic savings into productive economic activities.
- Deposited gold is refined and can be used by jewellers or banks, thereby reducing fresh bullion imports.
- GMS replaced earlier schemes such as the Gold Deposit Scheme and Gold Metal Loan Scheme.
- Challenges include emotional attachment to jewellery, purity concerns, low awareness and limited participation.
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