Abstract

In 2015, the Government of India launched the Sovereign Gold Bonds (SGBs) scheme to reduce the gold import bill by providing an alternative to investing in physical gold. SGBs carry a fixed interest rate and various other benefits that investment in physical gold does not offer. Initially, the government planned to sell 50 tonnes worth of gold bonds by the end of FY16. However, this appeared to be a tough target to achieve judging by the unsatisfactory sale of the first two editions of SGBs although investors praised the scheme. Experts suggested that some changes in the scheme could help the SGBs enjoy greater success and reduce India’s trade deficit.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze the Sovereign Gold Bonds scheme and compare it with gold ETF, gold fund, and physical gold
• Explore some other ways to reduce the rising gold import bill of the Indian government

Keywords

Sovereign gold bonds, Gold consumption, Gold bonds, India Bullion and Jewellers Association, Gold reserve fund, Gold import bill, Trade imbalance