Buying gold is becoming increasingly difficult for the common man as prices continue to rise daily. This constant increase has left people worried.
Now, the government is set to make a decision that will have a direct impact on them.
On Saturday, after the budget announcement, the media questioned the Finance Minister about the Sovereign Gold Bond (SGB) scheme.
In response, the Minister stated that the government is planning to discontinue the scheme.
Let’s understand what this scheme is and how its closure will stop people from getting gold at affordable rates.
SGB Scheme
The scheme in question is the Sovereign Gold Bond (SGB) Scheme, launched by the central government in 2015.
Its primary goal was to provide gold to the common people at prices lower than the market rate.
Additionally, the scheme aimed to reduce the demand for physical gold and encourage investment in digital gold.
However, on February 1, after the budget announcement, Finance Minister Nirmala Sitharaman stated that the government has to pay high interest on borrowings under this scheme, which is increasing its financial burden. Due to this, the government is now considering shutting it down.
Investors were getting huge profits
Although the government’s borrowing cost was rising, and the scheme was becoming expensive for them, common investors were benefiting with strong returns.
According to a report by ET, the SGB scheme had provided investors with returns as high as 160% in recent years.
However, from an economic standpoint, it has now become challenging for the government to continue the scheme.
New schemes for investors
Although the government plans to discontinue the Sovereign Gold Bond, it is exploring other new schemes, including gold ETFs (exchange-traded funds) and other financial products.
These alternatives offer investors a safe and easy way to invest in gold.
Additionally, the government may take steps to control gold imports, helping to keep gold prices stable in the domestic market.
