India's $5 Trillion Gold Hoard: Can the Government Unlock It?

India holds an estimated $5 trillion worth of gold in households and temples. It still spends billions importing more each year. With the rupee under pressure and the trade deficit widening, the government is looking at a familiar fix: reviving the Gold Monetisation Scheme, this time with jewellers as the channel.

The stock of idle gold is staggering. Roughly 25,000 tonnes sit in private hands, outside the banking system, earning nothing. India imports about 800 tonnes of gold annually, a bill that runs past $30 billion and strains the current account. Every dollar spent on imported gold is a dollar that does not flow into productive investment.

The old Gold Monetisation Scheme, launched in 2015, never took off. Households could deposit gold with banks, earn interest, and get it back at maturity. The problem was practical: banks had no infrastructure to assay, store, or liquidate the metal. The scheme collected barely 10 tonnes in its first three years.

The new push changes the intermediary. Jewellers would act as collection agents, accepting gold deposits and issuing certificates that banks recognise. The jeweller gets working capital at a lower cost than borrowing from a bank. The depositor earns interest without losing ownership. The central bank gets a domestic source of gold that reduces import dependence.