This is a blog created specially for the readers of the book Indian Economy Key Concepts. This is mostly to provide Indian Economy related news that is published in various newspapers under one umbrella. My own write ups will be posted very rarely.
The announcement comes at a time when yellow metal prices are rallying.
he government announced that the application window for the third tranche of the Sovereign Gold Bond (SGB) scheme will be March 8-14 and the bonds issued on March 29.
The first tranche of the scheme, unveiled in November 2015, attracted 62,169 applications for 915.9 kg of gold worth Rs. 246.2 crore. This subdued performance prompted the government to tweak the scheme’s rules to make it easier to buy the bonds.
The second tranche, which opened in January 2016, met with greater success, attracting 3.16 lakh applications for 2,790 kg of gold worth Rs.726 crore.
“The Government of India, in consultation with the Reserve Bank of India, has decided to issue third tranche of SGB. Applications for the bond will be accepted from March 8, 2016 to March 14, 2016. The Bonds will be issued on March 29, 2016.
The Bonds will be sold through banks, Stock Holding Corporation of India Ltd. (SHCIL) and designated Post Offices,” according to a statement from the government on Friday.
The announcement of the third tranche of the scheme comes at a time when gold prices are rallying—the yellow metal opened on Thursday in Mumbai at Rs.29,195 per 10 grams of 995 purity, its highest price since May 14, 2014.
In addition, jewellers across the country are on strike against Finance Minister Arun Jaitley’s Budget proposal to impose 1 per cent excise duty on jewellery.
The government on Friday clarified that the excise duty would be applicable only on jewellers having a turnover exceeding Rs.12 crore a year. “Jewellers having turnover below Rs.12 crore during preceding financial year will be eligible for exemption upto Rs. 6 crore during the financial year. Such small jewellers will be eligible for exemptions upto Rs.50 lakh for the month of March, 2016,” the government said.
“Even for this nominal 1 per cent excise duty, manufacturers are allowed to take credit of input services, which can be utilised for payment of duty on jewellery,” it clarified.The government’s plan behind the SGB scheme is to encourage those who use gold as a store of value to instead invest in the gold bonds as opposed to the physical yellow metal itself. The idea, among others, is to reduce India’s substantial gold imports, which were at $2.9 billion in January 2016, up 85 per cent over the same month of the previous year. The bonds, issued by the Reserve Bank of India on behalf of the government, have a tenor of eight years with an exit option from the fifth year onwards.
The maximum amount which can be subscribed is 500 grams per person per financial year and the interest rate on the bonds are set at 2.75 per cent per annum, payable on a half-yearly basis.