Govt Plans Record Rs 29,638 Crore Sovereign Gold Bond Issue In FY25

New Delhi, Feb 6 (KNN) The government is planning to issue sovereign gold bonds worth an unprecedented Rs 29,638 crore in the fiscal year 2025, marking a notable increase of over 10 per cent from the current fiscal level.

This move aims to accommodate the growing investor interest in "paper gold," according to a senior finance ministry official, as reported by ET.

In a remarkable turn, the gross collection from gold bonds surged beyond expectations, reaching Rs 26,852 crore (revised estimate) in FY24, significantly surpassing the initial projection of Rs 11,200 crore.

"It (elevated gold bond issuance) was partly driven by a sharp increase in investor interest due to the safe haven status of gold amid global economic and geopolitical turmoil and expectations of a good appreciation of gold prices in the medium-to-long term," the official stated.

Investors in gold bonds typically benefit from an annual interest payout, approximately 2.5 per cent, in addition to potential gains from the appreciation of the precious metal's prices.

The net issuances of such bonds, after considering redemption, are estimated at Rs 26,138 crore in FY25, compared to Rs 25,352 crore in the current fiscal year.

Introduced in late 2015, the government's gold bond and gold monetisation schemes aimed to discourage physical gold purchases and reduce the impact of gold imports on the current account deficit.

The gross collection through these schemes is projected to reach Rs 31,168 crore in FY25, up from Rs 28,240 crore (revised estimate) in the current fiscal.

Similarly, the net collection is expected to increase to Rs 27,571 crore in FY25, compared to Rs 26,653 crore the previous year.

The sovereign gold bond scheme caters to investors viewing gold as an investment, providing them with an opportunity to purchase paper gold instead of physical gold.

(KNN Bureau)