Government Schemes (Yojana) in India Part:-16
Dear Friends,
The List of Schemes Launched by Hon’ble PM Government of India, Shri Narendra Modi Part :--16
Aims and Benefits
Implications for India
Conclusion
Sovereign Gold Bonds Scheme
Introduction
Sovereign Gold Bonds scheme was launched in the budget session 2016 and approved by the cabinet to reduce the demand for physical gold
Background
About Gold Bonds
How does Gold Bonds Work?
Limitations
Conclusion
Government exams are increasingly raising the level of General Awareness questions. The General Awareness sections of Government exams frequently ask questions based on ongoing important schemes in India and Government policies. Here’s an article to help you remember major Government schemes & Government Policies for UPSC, SSC CGL, SSC CHSL, SSC MTS, SBI PO, SBI Clerk, RBI Grade B, RBI Assistant and all IBPS exams.
The General Awareness section of Bank and SSC exams can be a life saver for you because GK & Current Affairs are fact based and don’t require you to be calculative or fluent in English. All you need to score in General Awareness section of any exam is to stay updated about recent happenings.Especially those related to trending Government policies for SSC and Bank exams.
The List of Schemes Launched by Hon’ble PM Government of India, Shri Narendra Modi Part :--16
Better Than Cash Alliance Network
Introduction
The move towards cashless economy in India has its roots from Jan Dhan Yojana triggered through UN’s Better Than Cash Alliance Network
Background
The move towards cashless economy in India has its roots from Jan Dhan Yojana triggered through UN’s Better Than Cash Alliance Network
- Better than Cash Alliance Network is an initiative of United Nations Capital Development Fund (UNCDF)
- United Nations Capital Development Fund (UNCDF) is the secretariat of the alliance based at United Nations
- It is a partnership of international companies,agencies and countries
- Alliance is funded by Bill and Melinda Gates foundation, Master card, Visa,Citi foundation, Omidyar network and Ford foundation
Aims and Benefits
- Aim is to help countries to make a transition to electronic or digital payments
- Alliance promotes inclusive growth
- The alliance promotes financial inclusion
- It enhances digital finance
- It reduces poverty by helping nations to benefit poor directly
- Reduce costs for countries
- Increases transparency levels
- Women empowerment
Implications for India
- It fueled the world’s largest financial inclusion system of Jan Dhan Yojana in India
- It Helped open about 180 million accounts in a year accumulating to $3 billion in deposits in India
- It Brought nearly 300 million Indian citizens under formal banking sector in 3 years
- The financial inclusion along with Aadhar identification will help in identification of beneficiaries to provide subsidies
- The LPG subsidy is a major success in India through DBT saving $2billion to GOI annually
- India is a great case study and success story of Better than cash alliance
- India can enhance its research and technology by joining in the alliance
- India gained a policy partner through the alliance
Conclusion
- India has benefited a lot from the alliance in the recent demonetization scenario
- Government of India has partnered with the alliance to make a change to cashless economy
- It has improved transparency levels to a great extent by bringing most of the financial transactions under formal banking sector
- Alliance has given India the required infrastructure and technical expertise to change to a cashless economy
- The alliance has helped India develop a digital economy
- Creating awareness and changing the attitude of the Indians from traditional to modern methods is a big challenge
- India is progressing to a cashless economy despite facing a lot of hurdles and challenges
- UN Better than cash alliance is an aid to India’s “Digital India” Mission
- Overall, India is changing with the partnership of the UN Better than cash alliance
Sovereign Gold Bonds Scheme
Sovereign Gold Bonds scheme was launched in the budget session 2016 and approved by the cabinet to reduce the demand for physical gold
- India is one of the largest importers of Gold in the world
- The demand for Gold in India is rising rapidly
- Imports of India see a hike with Gold as the major contributor
- This affects the balance of trade figures for India
- Government of India needed to restrict the Gold imports to have a positive balance of trade
- This created the need for Gold bond scheme
- Gold Bonds are seen as an alternative to purchase gold metal
About Gold Bonds
- Gold Bonds are issued by RBI with a fixed interest rate
- RBI in consultation with Finance ministry determines the issuing amount
- Ministry of Finance is the concerned ministry
- Risk of gold price changes borne by the Gold Reserve Fund created by RBI
- Government of India aims to shift 300 tonnes of Gold purchased annually as bars and coins into the Gold Bond Scheme
- This Gold Bond scheme is expected to help GOI sustain the current account deficit
How does Gold Bonds Work?
- Gold Bonds are sold in banks
- Investor can walk in buy the gold bonds from the banks preferably where they have their Saving Bank accounts
- Gold Bonds are treated in a similar manner as a Bank Fixed Deposit
- The interest rates are fixed at 1 to 2 percent
- The tenure of the bond is from 5 to 7 years
- Value of the bond is determined by the gold price movements in the market
- Gold Bonds have an attractive feature
- The investor will get the value of bond according to the prevailing gold prices in the market at the time of redemption
- In this manner, the investor will get the same benefit of purchasing the metal gold without actually purchasing it
- In this manner, GOI can restrict Gold imports to a certain extent
- Returns on gold bonds can be positive or negative
- All risks of the gold bond are covered under the Gold Reserve Fund
Features of Gold Bond
- Bonds issued by RBI with a sovereign guarantee
- Bonds can be easily traded and sold on exchanges
- Gold Reserve Fund will be created by GOI through RBI
- On gold bond maturity, redemption will be made in Rupee only
- Price of gold bond will vary with the market prices of gold
- Investor needs to be aware of this price volatility
- Gold bond deposits will not be hedged
- RBI has fixed tenor of the bond from 5 to 7 years to protect the investors from medium term volatility
Limitations
- NRI cannot buy gold bonds issued by RBI
- Common Indian buys gold for marriage and other occasions as a Jewellery and not for investment purpose
- The attitude of a common Indian towards gold is not of investor nature
- This attitude will see a Luke warm response to the Gold bonds scheme
- The interest rate offered is very low in the tune of 1% to 2%
Conclusion
- The effectiveness of the scheme will depend on the investor attitude towards the gold bond scheme
- Government of India must take steps to change the mindset of Indians from viewing gold as a jewellery or a status symbol to an investment avenue
- This transition in behavior of Indians will take time Overall, Gold bond scheme is a welcome measure to cut imports on gold purchase
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