The government has not released a new installment of Sovereign Gold Bond (SGB) since February 2024. Since then, investors have been waiting for the new installment of SGB. The government has not even announced to close this scheme formally. This has caused confusion among investors. Now the Union Minister of State for Finance has given information about this. In a written reply to a question, he has told the Rajya Sabha about the government’s plan regarding SGB.
Chaudhary has said, “Under the date management strategy, the government has to see how to keep the cost of the loan that it takes at least.” He has said that the government considers a variety of financial instruments to take loans. These include Government Securities, Treasury Bill and SGB. Each of these instruments has different costs. Keeping that cost in mind, the government decides which instrument it has to use to raise loans.
The government’s decision to not release the new installment of SGB may cause the rise in gold prices. Since February last year, gold prices have risen more than 70 percent. Because of this, the use of SGB to raise loans has become a loss deal for the government. In the last few years, the price of gold has risen due to increase in geopolitical tension. Whenever there is upheaval in the world, gold demand increases. This also increases its prices. The reason for this is that gold is considered the safest medium of investment.
The government launched the Sovereign Gold Bond (SGB) in 2015. Since then, the government has raised Rs 72,275 crore from this scheme. So far, the government has released 67 installments of this scheme. In this scheme, the RBI releases gold bonds on behalf of the government. These bonds mature in 8 years. On maturity, the government redeems gold bonds based on the ongoing price of gold. Apart from this, investors also get 2.5 percent interest on their investment.
Investors showed good interest in SGB. On the other hand, two objectives of the government were fulfilled by SGB. First, the government did not have to do much gold by investing in SGB instead of investors investing in physical gold. Second, the government used to get loans on low cost. However, in the last few years, the SGB was proving to be a loss deal for the government due to the tremendous rise in gold prices. On the other hand, SGB investors have benefited greatly from the rise in gold prices. From the information given by Minister of State for Finance Pankaj Chaudhary to the Rajya Sabha, it seems that there is no hope of presenting a new installment of the SGB of the government.