Government Reduces FY25 Gold Bond Issuance Target by 38%
The government has significantly scaled back its sovereign gold bond issuance target for FY25 to Rs 18,500 crore, down from the interim budget estimate of Rs 29,638 crore. This adjustment reflects changing market dynamics and investor preferences, with more retail investors turning to equity markets.
The central government has revised its "paper gold" issuance target to Rs 18,500 crore for fiscal year 2024-25, marking a substantial reduction from both the interim budget projection of Rs 29,638 crore and the revised estimate of Rs 26,852 crore for 2023-24.
A senior government official, speaking anonymously, explained, "The revision comes after evaluating multiple parameters, including shifting investor preferences, competitive investment products, and global economic uncertainties that have emerged since the February interim budget."
The net issuances of sovereign gold bonds, accounting for redemptions, have been adjusted downward to ₹15,000 crore for the current fiscal year, compared to the earlier estimates of ₹26,138 crore in the interim budget and ₹25,352 crore in FY24 (revised estimate). Industry expert Harish Galipelli, director at ILA Commodities India, attributes this shift to retail investors increasingly favoring equity investments for potentially higher returns.
The sovereign gold bond program, introduced in late 2015 alongside the gold monetisation scheme, was designed to reduce physical gold purchases and their subsequent impact on the current account deficit through imports. While the bond scheme targets investors seeking gold exposure through paper instruments, the monetisation scheme aims to activate dormant gold holdings from households and religious institutions to boost domestic supply.
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