July Budget and slashing of SGBs: A setback for portfolio balancing

Understandable if govt decided not to bear exchange and capital appreciation risks on SGBs anymore, but this would be a pity for investors who would no longer have this option to balance portfolios

The July Budget made two changes in the treatment of gold that affect investment portfolios. The reduction in import duties to 6 per cent from 15 per cent in the latest Budget lowers input costs for jewellers and compresses margins for smugglers. The July Budget also implies a cut in the issuance of sovereign gold bonds (SGBs). It targets a gross issuance of Rs 18,500 crore of SGBs in FY25, which is considerably lower than projections of Rs 29,638 crore of gross issuances in the Interim Budget.

Gold is a traditional haven in times of crisis and a