Modiji’s Gold Monetization Plan

The Gold Monetization Plan (GMP) is a scheme launched by the Government of India in 2015 to mobilize the idle gold resources of the country. The plan aims to encourage individuals, households, and institutions to deposit their gold holdings with banks in return for interest on their deposits. The primary objectives of the Gold Monetization Plan are to reduce India's reliance on gold imports, mobilize the idle gold in the country, and put it to productive use.

Under the Gold Monetization Plan, individuals can deposit their physical gold, including jewelry, bars, or coins, with banks in designated gold deposit accounts. The deposited gold is tested for purity and then valued by the bank. The depositor receives a certificate of deposit (Gold Deposit Certificate) from the bank, which reflects the quantity and purity of the gold deposited.

The Gold Deposit Certificate provides two options to depositors:

1. Short-term deposits: These are for a period of 1-3 years and earn interest rates determined by the banks. The interest can be paid in cash or gold.

2. Medium and long-term deposits: These are for a period of 5-7 years or more. The interest rate is fixed by the government and is paid in cash. The interest rate on medium and long-term deposits is generally higher than that of short-term deposits.

At the end of the deposit period, the depositor can choose to redeem the deposit in cash or in the form of gold. The interest earned is exempt from income tax, and the capital gains arising from the appreciation in the value of gold are also tax-exempt.

The deposited gold is used by banks to meet the domestic demand for gold or to lend to jewelers, thereby reducing the need for importing gold. This helps in curbing the outflow of foreign currency and reducing the country's trade deficit.

The Gold Monetization Plan provides an avenue for individuals and institutions to earn interest on their idle gold holdings while contributing to the country's economic growth. It also promotes financial inclusion by encouraging people to bring their gold into the formal banking system.