Jewellers welcome proposed gold monetisation scheme but fear melting may play spoilsport

“The gold I own is lying idle with me. Rarely do I use it. I am happy with the government’s proposed gold monetisation scheme, which will fetch me some money for the metal that was given to me in marriage and what I purchased over the years,” says Neha Karekar, practising company secretary from Thane. Karekar says that the proposed scheme, once implemented, will also lead to more money circulation in the system. The government has released a discussion paper on the gold monetisation scheme the finance minister had proposed in his Budget. The paper proposes to offer tax-free interest on gold that is deposited with the banks. It proposes individuals and institutions to deposit gold as low as 30 gms. The earlier gold deposit scheme of the government stipulated a minimum quantity of 500 gms of gold to be eligible for the scheme. [caption id=“attachment_2253886” align=“alignleft” width=“380” class=" “] Reuters[/caption] At 30 gms, it is an attractive scheme, said Ishu Datwani, Founder, Anmol Jewellers, Mumbai. “People would go for it and be willing to put in as much as 100 gms or even more. Suppose a person went with, say half kg or one kg gold, would he/she be allowed to deposit the gold without any questions asked about its source, bills, etc? No one wants to be in the eye of the Income Tax authorities. If the government ensures that, the scheme would be a success,” he says. Datwani says that the scheme will benefit the country’s sluggish economy. “It will hit smugglers of gold, which is a good thing. But I feel most people will use it to melt their old, damaged ornaments or jewellery that they do not use any more and be happy to part with it and make some money on it. For the scheme to be a success, a mere 30 gms by a few households won’t help. It would require huge amounts to be brought out and be given to banks so that it benefits jewelers like us, which in return helps the economy too.” Jewellers are gung-ho about the scheme. It is a great initiative the government has taken, says Samir Sagar of 60-year-old firm, Manubhai Jewellers, reasoning that with a lot of idle gold lying in the country, this scheme would help monetising the same. “However, for the scheme to come into full practice and achieve the desired objective, the jewellery deposited needs to be melted. The Indian consumers buy jewellery predominantly for its sentimental value. Most purchases are invariably tied back to emotional milestones of their lives. Thus, we see this as a deterrent for individuals to make full use of the scheme,” he said. As per the discussion paper, the proposal is to melt the gold ornaments and make them into bars before depositing it with the banks. “Each piece of gold that I own has a sentimental value, either inherited or what I bought over the years from my savings. I would give my gold to the government for safekeeping and expect them to give it back in its original form with some money, of course. Melting my ornaments is out of the question,” says Rekha Partharasarathy, a bank employee. However, Sumathi Rajit,  who works for an MNC, gives a different perspective on melting her ornaments for the scheme. “I would gladly give up my gold and make it into a bar and deposit with the bank and get interest on it.” She sees many benefits in the scheme. “First, it is with the government and so it is safe. I don’t have to pay safe deposit locker charges for storing my jewellery with banks as of now with the scheme. It is a win-win situation because I get interest for the gold and what’s more, I can buy new jewellery for my daughter, whose tastes differ from mine, when she is of marriageable age.” D D Jose, Managing Director, Kerala-based Alukkas Jewellery, says that of his clientele, around 40 percent come to sell old gold in exchange for new jewellery. He does not recall any one who has come to encash gold. “That is not an Indian sentiment,” he says. Most jewelers that Firstpost spoke with said in their experience, they found the retail consumer hesitates to part with the jewellery even if it is an exchange. With the scheme the government is trying to break this emotional bonding. A tall task indeed.