Gold Monetization Scheme 2.0 Needs Major Reforms to Succeed: Economist Anand Srinivasan

With reports suggesting that the Central Government is planning to relaunch the Gold Monetization Scheme (GMS) 2.0, economist Anand Srinivasan has said the revamped scheme can succeed only if key shortcomings of the previous version are addressed.

Speaking about the proposal, he said the earlier Gold Monetization Scheme received a poor response due to low interest rates, a complicated deposit process, and the emotional value people attach to their gold jewellery. He added that many people were also hesitant to deposit their gold because of concerns over tax scrutiny and the loss of making charges when ornaments are melted.

According to Anand Srinivasan, the government should make the scheme more attractive by offering better interest rates, simplifying the deposit process, and allowing reputed jewellers to participate along with banks. Such changes would improve public confidence and encourage more people to join the scheme.

He pointed out that India imports nearly 800 tonnes of gold every year, while Indian households are estimated to hold 30,000 to 40,000 tonnes of gold. If even a small portion of this idle gold is brought into the banking system, it could significantly reduce gold imports and help conserve valuable foreign exchange.

However, he believes the scheme may primarily benefit those who own gold coins or bullion, as most jewellery owners are unlikely to deposit ornaments due to sentimental attachment and concerns over losing making charges.

Anand Srinivasan concluded that Gold Monetization Scheme 2.0 can become successful only if the government introduces practical reforms, builds public trust, and provides meaningful financial incentives. Otherwise, the scheme could face the same challenges as its earlier version.