Monday, September 18, 2017

After messing with the Indian people over their currency, Prime Minister Modi wants to resurrect gold for Rupees scheme

As many individuals in the financial world, along with over one billion citizens in the country of India remember late last year, Prime Minister Modi severely screwed up the nation's economy by making it illegal to hold 500 and 1,000 Rupee notes by the end of 2016.  And in response, many Indians resorted to dumping their fiat currency in favor of gold and gold jewelry, which led to shortages that caused the price to soar to numbers as high as $3600 USD per ounce.

As news continues to come in from the nation of India following the government's order to eliminate certain currency notes from their monetary system, the rush to both trade in, and move money out of banks has been the singular thought for hundreds of millions of people. 
And as part of this monetary transfer has been the massive demand for gold, especially since Modi pushed for a suspension of imports of the yellow metal last week.  And according to many sources, the price of gold in dollars has now reached over $3600 per ounce as the people move to get rid of their rupees and into the one tangible asset that weathers all crises. – The Daily Economist
Yet before Modi saw fit to demonitize a large portion of the nation's currency, his administration had also embarked on a scheme to try to con the Indian people out of their gold by offering to 'lease' it from them using an interest bearing vehicle denominated in you guessed it...

the same currency that he would later remove from the economy.

And since this scheme did not come close to drawing even 1% of the country's gold out of the hands of the people and into central bank coffers, Prime Minister Modi is trying once again and has reconstituted the gold for Rupees scheme.

All-out efforts are being made to revive the Gold Monetisation scheme, which failed to take off since its launch two years ago. 
The aim of this scheme was to mobilise “idle gold” with households, estimated by the World Gold Council at 25,000 tonnes or almost half the value of this country’s gross domestic product. However, the scheme has not even attracted 10 tonnes since the launch in November 2015. Even this has mostly been from temples, not homes. 
Suggestions on how to revive it are being discussed by a panel formed by the Niti Aayog. These include involving jewellers as collection centres, addressing of issues that banks have been facing and using domestically available gold for giving metal loans to jewellers for domestic sales.  – Business Standard


Looking at the current scenario , the steps taken by the Indian Prime Minister has got mixed feed back. But one thing to wonder about is that how far this change go. What will be the consequences and so on. The people somehow dealt with demonetization, but will be ready to face another change.

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