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Government-owned MMTC, the country’s largest international trading company, will hold the first auction under the Gold Monetisation Scheme (GMS) of the central government in the next 10 days.
The Government of India has mobilised about 21 tonnes of gold under the scheme. Of this, 12 tonnes is aimed to be sold through auction in the next three to six months, said a senior official of MMTC.
“We have completed the documentation with the department of expenditure to initiate the process. The notification for the auction is expected in a day or two and the auction will be held in the next seven to 10 days,” he added.
Under GMS, gold deposits are accepted from households, temples and trusts, with tenures of 1-3 years (short term), 5-7 years (medium term) and 12-15 years (long term).
While short-term deposits are converted into gold coin by MMTC, the long-term ones are marked for auction. The official said the majority of the gold under the scheme had come from temples and trusts. The response of households has been poor.
In his 2015-16 Budget speech, Finance Minister Arun Jaitley had said stocks of gold in India were estimated to be over 20,000 tonnes and most of this was neither traded or monetised. GMS aimed to put part of this 'idle' gold into circulation. And, in the process, achieve import substitution to that extent.
Comparatively, the India Gold Coin scheme of the government has had better response, with MMTC already reporting sale of 80,000 gold coins. “Our plan is to sell 150,000 gold coins by the end of 2018-19. Our major challenge was to build a campaign to popularise the scheme and have enough outlets selling the coins,” the official said.
Apart from MMTC’s own offices, it has agreements with banks to sell the coins through 400 branches across the country, to be expanded to 700 branches. Also, to launch online sale in about three months.
Import of gold has risen from about 700 tonnes in 2016-17 to an estimated 950 tonnes this financial year, a rise of 35 per cent. A year before, due to volatility in the market, price fluctuation, demonetisation effect and slackening of demand, particularly from the rural sector due to drought in some parts, gold import was less and stocks with jewellers had almost depleted.
This year, with international prices stabilising and there being buoyancy in the rural economy due to a better monsoon, demand has picked up and jewellers have gone for replenishing their stock.
Beside, recent changes in the Goods and Services Tax notification on gems and jewellery, stating a PAN (income tax identification) card will no longer be mandatory on the purchase of jewellery over Rs 50,000 has boosted sales.
- About 21 tonnes of gold were mobilised under the Gold Monetisation Scheme
- MMTC plans to auction 12 tonnes of gold in the next six months in the country
- MMTC aims to sell 150,000 India Gold Coins by the end of 2018-19
- 700 bank and India Post branches and online sales to boost gold coin sales
- Gold imports higher at 950 tonnes this financial year, up 35% from last year