Gold Monetisation Scheme to End for Medium-Term, Long-Term Deposits
Key Points
The Union Government of India has announced the discontinuation of the Medium-Term and Long-Term components of the Gold Monetisation Scheme due to evolving market conditions. This decision is crucial for UPSC aspirants, especially for those focusing on GS Paper 3, which covers economic development. Last Updated: 2025-03-27
Key Facts About Gold Monetisation Scheme
- Gold Monetisation Scheme is being revised by the Indian government.
- Discontinuation affects Medium-Term and Long-Term deposits.
- Short-Term Bank Deposits will still be available.
- Guidelines will be provided by the Reserve Bank of India.
- Scheme launched in November 2015.
- Aims to make idle gold productive.
- Reduces gold imports and current account deficit.
- GMS has three components: Short-Term, Medium-Term, Long-Term.
- Medium-Term deposits had a fixed interest rate of 2.25%.
- Long-Term deposits offered a fixed interest rate of 2.5%.
- Deposits accepted until March 26, 2025.
- Existing deposits will continue until redemption.
- Government also discontinued the Sovereign Gold Bonds.
- Sovereign Gold Bonds aim to reduce physical gold demand.
- Bonds issued in denominations of 5g, 10g, 50g, and 100g.
- The interest rate on bonds is 2.5%, credited semi-annually.
India's Economic Strategy and Gold Monetisation
The Gold Monetisation Scheme plays a significant role in India's economic strategy by aiming to reduce the import of gold, which is a major contributor to the current account deficit. By making idle gold productive, the scheme aligns with India's broader economic goals of enhancing financial stability and promoting sustainable economic growth. The discontinuation of the medium and long-term deposits reflects a strategic shift to adapt to changing market dynamics.
Related Government Schemes/Policies
- Sovereign Gold Bonds: Aims to reduce the demand for physical gold by offering bonds with a fixed interest rate.
UPSC Relevance
- GS Paper 3: Economic Development - Understanding the impact of gold monetisation on the economy.
- Prelims: Questions on the components and interest rates of the Gold Monetisation Scheme.
- Mains: Analytical themes on the effectiveness of the scheme in reducing the current account deficit.
- Essay Paper: Topics on economic reforms and their impact on national growth.
FAQ Section
- What is the Gold Monetisation Scheme?
The Gold Monetisation Scheme, launched in November 2015, aims to make idle gold productive by allowing citizens to deposit gold and earn interest.
- Why is the Gold Monetisation Scheme important?
It is crucial for reducing gold imports and the current account deficit, thus contributing to India's economic stability.
- What are the key features of the Gold Monetisation Scheme?
The scheme includes Short-Term, Medium-Term, and Long-Term deposits, with interest rates of up to 2.5%.
Detailed Coverage
- Gold Monetisation Scheme is being revised by the Indian government.
- Discontinuation affects Medium-Term and Long-Term deposits.
- Short-Term Bank Deposits will still be available.
- Guidelines will be provided by the Reserve Bank of India.
- Scheme launched in November 2015.
- Aims to make idle gold productive.
- Reduces gold imports and current account deficit.
- GMS has three components: Short-Term, Medium-Term, Long-Term.
- Medium-Term deposits had a fixed interest rate of 2.25%.
- Long-Term deposits offered a fixed interest rate of 2.5%.
- Deposits accepted until March 26, 2025.
- Existing deposits will continue until redemption.
- Government also discontinued the Sovereign Gold Bonds.
- Sovereign Gold Bonds aim to reduce physical gold demand.
- Bonds issued in denominations of 5g, 10g, 50g, and 100g.
- The interest rate on bonds is 2.5%, credited semi-annually.