Former Reserve Bank of India (RBI) Governor Venugopal Reddy on Sunday said the government needs to come out with a comprehensive 'gold policy' owing to its role in the economy and to handle the precious metal in a better way.
Speaking at ongoing Hyderabad Literary Festival, Reddy also said it was the confiscated gold from smugglers that was pledged in the international market to tide over Balance of Payments (BoP) crisis in 1990.
"It is time we have a positive approach to policy for gold. There must be positive comprehensive gold policy and I believe it is so important for the economy that so many people are dependent on it," he said.
"Crores of rupees are traded in the market and so many consumers, so many are producers. Therefore, it is time for the government to think of White Paper on positive comprehensive policy for gold," Reddy said in his speech titled 'Gold - Black, White and Yellow'.
He said in 2015-16, for the "first time" there was some positive signal with regard to gold from the government's side.
According to Reddy, launching of a gold scheme and making PAN number compulsory for purchases of gold jewellery worth more than Rs 2 lakh shows the seriousness of government in making the making gold a commodity.
"We also found that the gold jewellers were asked to provide PAN details of consumers who bought jewellery worth more than Rs 2 lakh so that it can be tracked. Recognition of gold as commodity or something is important that the public policy cannot ignore. These are signs of positive policy," he opined.
Recalling the experiences faced by the Centre in 1990 on BoP crisis, he said the government had very little gold of its own and most of the metal put out in the international market was seized from smugglers.
"Government of India had leased gold to SBI (during 1990 crisis). How did the Government of India come into possession of gold? Most of the gold was confiscated from smugglers. So the smuggled gold, the confiscate gold came handy," Reddy said.
"Smugglers also helped us to get over the BoP crisis," he said in a lighter vein.
He maintained that gold is the ultimate currency in the world, though domestically possessing it is part of Indian culture and for women it acts like insurance.