Sovereign gold bond may break, difficult to buy cheap gold

The government may soon take a big and important decision on Sovereign Gold Bond (SGB). To reduce the government’s debt, the Finance Ministry is considering a plan not to issue Sovereign Gold Bond (SGB) from the next financial year (2025-26).

The government may soon take a big and important decision on Sovereign Gold Bond (SGB). To reduce the government’s debt, the Finance Ministry is considering a plan not to issue Sovereign Gold Bond (SGB) from the next financial year (2025-26). According to the report, the government will have to pay the equivalent of gold to SGB investors on maturity, which will increase the government’s liability. Regular payment of interest also puts financial burden on the government.

whose purpose was to reduce the import of gold

Since the government has decided to continuously reduce the debt-to-GDP ratio from FY27, there is no need to continue with any such plan. Additionally, the original objective of the scheme was to reduce gold imports, which has now been accomplished.

What did Finance Minister Nirmala Sitharaman say?

Finance Minister Nirmala Sitharaman can give information about loan reduction in the financial year 2026-27 in her budget. The government estimates the debt-to-GDP ratio to decline from 58.2% to 56.8% in FY2025. Sitharaman had said in her budget speech in July this year, “Our target is to bring the deficit below 4.5% by next year (2025-26). From 2026-27 onwards, we will work to reduce the central government debt to GDP ratio every year.”

The government did not issue SGBs in FY2015. For this he has kept a budget of Rs 500 crore. This FY24 interim budget is Rs. 126,852 crores less. The Reserve Bank of India (RBI) last on February 21, Rs. SGBs worth Rs 18,008 crore were issued.

What are Sovereign Gold Bonds (SGBs)?

Sovereign Gold Bonds (SGBs) are bonds issued by the RBI. This is an investment scheme in gold. Whose duration is 8 years. Whereas the lock-in period is 5 years. After the lock-in period is over, customers can encash before the interest payment date.