Professor Arvind Sahay, heading the India Gold Policy Centre (IGPC) at IIM-Ahmedabad, on Friday said that the Gold Monetisation Scheme (GMS) was not “successful”.
Sahay while speaking to media persons on the sidelines of a day-long conference on “Gold and Gold Markets” at the IIM-A, said that the lack of success of the scheme can be attributed to the original structure of the GMS. The Scheme addressed only some of the issues, he said, adding that a systematic solution needs to be brought about.
He said that we did not have wide-spread hallmarking centres. Moreover, there was no mechanism to provide banks with incentives for the initiative. Gold, he said, should be the economic driver, which is not so.
Sahay also said that India being the second biggest market of gold in the world, need to develop strategies that would help use gold to the country's economic advantage. The professor further added that the best brains needed to come together and address issues such as price volatility, imports, the place of gold in savings and insurance, how gold can be monetised and bought back into circulation, consumption patterns and so on. Any development in the gold market directly impacted many other sectors and markets in the economic environment of India, he pointed out.
Asked if findings would be shared with the Central Government, Prof. Sahay said that “not in particular”. He said that the government was aware about it and it was up to the government to take a decision.
Professor Sanket Mohapatra of the IGPC said that many emerging market economies, including India had increased their gold holdings during global risk. While the Reserve Bank of India significantly reduced the gold holdings in India, various other emerging market economies continued to expand their gold holdings.
Joshy Jacob, another member of IGPC, said that people invested more in stock market than gold in the recent times as the stock market provided more returns. Youngsters, he said, were inclined towards crypto-currencies.
Fourteen research papers were presented at the conference. Some of the themes included Gold monetisation in India as a transformative policy: A mixed method analysis; Multifractal modelling of the Indian gold market; Return and volatility spillovers: An evaluation of India's demonetisation policy; and Sources of uncertanity and the Indian economy.
IGPC at IIM-A, which is sponsored by the World Gold Council, is a centre of excellence and conducts cutting edge applied research on the gold industry in the country and provides insights at both policy as well as execution levels.