Despite Indian households holding an estimated 25,000 tonnes of gold worth $1.4 trillion, the Gold Monetization Scheme (GMS) launched in 2015 has struggled to gain traction, with only 37.81 tonnes of gold mobilized over a decade, the Ministry of Finance has admitted in a written reply in the Rajya Sabha.
Responding to a query from MP Smt. Rajani Ashokrao Patil, Minister of State for Finance Shri Pankaj Choudhary acknowledged that while the GMS aimed to channel idle gold holdings into the financial system, various market factors—including surging gold prices—had rendered the scheme unsustainable. Consequently, the government discontinued the Medium- and Long-Term Gold Deposit (MLTGD) components of the scheme as of March 26, 2025, retaining only the Short-Term Gold Deposits (STGD).
“The rising cost of gold led to increased costs for the Government, which prompted the discontinuation of certain components of the scheme,” the minister explained.
Meanwhile, the Sovereign Gold Bond (SGB) scheme, also introduced in 2015 to reduce demand for physical gold, has fared better but still faces challenges. As of March 31, 2025, the government had raised ₹72,275 crore through 67 tranches, amounting to approximately 146.96 tonnes of gold subscriptions. However, 18.81 tonnes worth of SGBs have already been redeemed as of June 15, 2025.
The government has not announced new tranches of SGBs, citing global geopolitical unrest and the resulting spike in gold prices. “The Government’s endeavor is to minimize the cost of borrowings, and the current environment necessitates prudent debt management before launching further SGBs,” the minister added.
The twin gold schemes—envisioned as tools to curb India’s gold imports and tap into its vast gold reserves—appear to be struggling to meet their initial objectives. With gold prices remaining volatile, the future of such instruments hinges on careful fiscal planning and investor confidence.
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