Unfavourable design: Sovereign gold bonds are a drain on govt finances

Officials may argue that the scheme has outlived its purpose since India no longer has a troublesome current-account deficit

Sovereign gold bonds, introduced in November 2015, may be on their way out, according to a report in this newspaper. The government had budgeted issuing such bonds worth Rs 18,500 crore this financial year, but thus far it hasn’t issued any. Gold bonds are supposed to mature after eight years, paying 2.5 per cent a year on their face value; they can be redeemed at the prevailing rate for gold. They had turned into an expensive drain on the treasury, and since they were not succeeding in their main aim, their withdrawal is welcome. They should stand as an example