Is the Sovereign Gold Bond Scheme going to be closed? Know why these things are happening

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Is the Sovereign Gold Bond Scheme going to be closed? Know why these things are happening

The Sovereign Gold Bond (SGB) scheme launched by the Government of India in 2015 could be discontinued from the upcoming monetary 12 months 2025-26. Let us let you know, its goal was to management the import of bodily gold in the nation. But now, in accordance to media studies, the authorities is contemplating ending the scheme as a part of its efforts to scale back its loan-to-GDP ratio.

Why could SGB scheme be closed?

According to a Business Standard report, a senior authorities official has mentioned that the Sovereign Gold Bond Scheme has fulfilled its preliminary goal. However, due to this the monetary stress on the authorities is rising. In truth, SGB traders have to pay the equal worth of gold at the maturity of the bond, thereby rising the monetary liabilities of the authorities. For this, 2.5% annual curiosity is paid each six months on SGB, which places further stress on authorities monetary assets.

Target to scale back loan-to-GDP ratio

The authorities goals to scale back the loan-to-GDP ratio steadily by FY27. According to media studies, Finance Minister Nirmala Sitharaman could announce the closure of this scheme in the FY26 price range. In the price range speech introduced in July, the Finance Minister had reiterated his dedication to hold the fiscal deficit under 4.5% by FY26. The loan-to-GDP ratio is predicted to scale back from 58.2% to 56.8% in FY25.

Decline in SGB issuance

Let us let you know, in the price range for monetary 12 months 2025, the allocation for SGB has been decreased to Rs 18,500 crore, which is lower than Rs 26,852 crore in FY24. The Reserve Bank of India (RBI) final issued SGB in February 2023, the quantity of which was solely Rs 8,008 crore. No new SGB has been issued since then.

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