Gold alternative soon | Deccan Chronicle
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Gold alternative soon

DC | 17th Dec 2012

New Delhi: The government may announce more measures to wean away the Indian middle class from gold towards other financial products including investments in direct equities.

“The gold import is one of the factors for the widening current account deficit. So there is a thinking on bringing out such a scheme, which will divert investment in other financial assets, which are more beneficial for corporates and the economy,” said a senior government official.

“Those investments, which increase the depth of the Indian markets, should be encouraged than gold which is an idle asset,” he said.

In 2011-12, India imported gold worth $62 billion compared to around $ 40 billion in 2010-11. The current account deficit (CAD) was at 30-year record high of 4.2 per cent of the GDP in 2011-12. However, there has been a slowdown in import of gold due to hike in duties.

Even finance minister P. Chidambaram has advised people from investing in gold calling it a dead asset. 

“More and more households should be encouraged to save in financial instruments rather than in gold,” he had said.

The senior official, who refused to be quoted, said that the government may also fine-tune the Rajiv Gandhi Equity Saving Scheme in the Budget to make it more attractive for the retail investors.

The Rajiv Gandhi Equity Saving Scheme, which was announced in the last budget by then finance minister Pranab Mukherjee, offers tax benefits to the first time investors if they invest in the permitted securities, mutual funds or ETFs, provided that their annual income is less than Rs 10 lakh.

New investors can invest Rs 50,000 and get a tax benefit on 50 per cent of this investment. “The ambit of the scheme could be increased so that more people come under its net,” he added.

Meanwhile, the finance ministry has also initiated the process of setting up an exchange traded fund of 20 profit-making PSUs and will soon float a Cabinet note to seek opinion of other ministries. 

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Robert Ganz's picture
by Robert Ganz (not verified) on
The Indian government & central bank will come to your rescue and relief you from your evil gold for pretty paper. As we say in America LOL (Laughing Out Loud) Robert Ganz Denver, CO USA

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