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How much gold do Indian temples have? Should India use its temple gold reserve for development?

How much gold do Indian temples have? Should India use its temple gold reserve for development?


  • GS 3 || Economy || Banking & Financial Sector || Money


  • Gold is a reddish-yellow, malleable metal that occurs naturally and has little reactivity with other minerals. It is a valuable precious metal with a high economic value.
  • One of the most important applications of gold today is as a currency reserve. It is also a widely accepted form of money or currency around the world.
  • It has also evolved as a form of investment. Because of its price volatility, gold can influence an individual’s or a nation’s economic fortunes.

Gold in India- Households and Temples

  • Collectively, Indians own the biggest private stash of gold in the world, and religious adherents have long donated gold to temples, often to honor deities associated with individual temples. Over the centuries, that’s made the country’s 3 million religious houses some of the world’s largest holders of precious metal. But now India’s temples—shut for months because of the coronavirus pandemic and deprived of donations—are being forced to consider depositing some of their famed stashes of gold with banks to pay mounting bills.
  • A few years earlier, the World Gold Council estimated gold holdings in India at 22,000 tonnes. Estimates of gold with temples in the country could be 3,000-4,000 tonnes. These would be in the form of coins, jewelry, and gold articles. Temples also have diamonds, given as offerings; there’s no segregated value-guess on this.
  • Much of this is what is termed ‘idle’ gold — just in lockers of vaults. The central government’s recently launched Gold Monetisation Scheme was one attempt to get these hoards out and put them to productive use. Under it, jewelry and other articles have to be melted to verify the purity and sent to refineries for making bars. However, then, the antique value of any of these will be lost.
  • Experts and analysts were of the opinion that it would be worth having a central exhibition centre, with high security, for antique jewelry. Tourists, for one, would like a look and temples could earn from this. The Travancore Devaswom Board, a prominent temple association in the southern state of Kerala, has for the first time decided to deposit some of its treasures with banks—which pay interest on gold deposits of varying terms—to raise funds and pay salaries.

Gold Monetization Scheme and its benefits

  • Gold Monetisation Scheme was introduced to replace the existing Gold Deposit Scheme (GDS), 1999. The scheme facilitates the gold depositors to earn interest of 2.25% annually for a short-term deposit of one year to three years. An interest rate of 2.5% is provided to the depositors for medium and long-term deposits. The Reserve Bank of India (RBI) has made it simpler for depositors to surrender their gold holdings.
  • The RBI liberalized the GMS in 2015, allowing depositors to deposit bullion directly with banks, refiners, or Collection and Purity Testing Centres (CPTCs). Previously, a tripartite agreement between banks, CPTCs, and refineries was required.
  • Temples, High Networth Individuals (HNIs), and entities such as fund houses, trusts, and even government entities will now find it easier to deal with banks directly rather than CPTCs.
  • Banks may accept gold deposits at designated branches, particularly from larger depositors.
  • The RBI also relaxed the rules under the scheme, which allows banks to allow depositors to deposit gold directly with refiners at their discretion.
  • This is also advantageous for the temples, as it is estimated that they hold approximately 4,000 tonnes of gold and are capable of depositing gold in tonnes under the scheme.

Other Schemes related to the Gold

  • Revamped Gold Deposit Scheme (R-GDS)-The minimum deposit at any one time shall be raw gold (bars, coins, jewelry excluding stones and other metals) equivalent to 30 grams of gold. There is no maximum limit for deposits under the scheme.
  • Proposed Changes in the existing scheme: The minimum requirement of 30 grams could be reduced to 1 gram. Interest earnings and capital gains under the scheme will continue to be exempt from the capital gains tax, wealth tax, and income tax.
  • Revamped Gold Metal Loan Scheme (GML)-It is a mechanism under which a jewelry manufacturer borrows gold metal instead of rupees and settles the GML with the sale proceeds obtained.GML can be availed for 180 days in the case of domestic jewelry manufacturers and 270 days in the case of exports.
  • The Gold Coin and Bullion Scheme-The government issues gold coins,which have the Ashok Chakra engraved on them.
  • Sovereign Gold Bond Scheme-It seeks to encourage people to buy gold bonds instead of actual gold. The Reserve Bank of India (RBI) issues these bonds on behalf of the central government.
    • The gold bonds will be denominated in multiples of gram (s) of gold with a basic unit of one gram while the minimum investment limit is two grams.
    • The maximum subscription is 500 grams per person per fiscal (April-March) and for joint holders, the limit will be applied to the first holder.
    • The gold bonds will be sold only to resident Indian entities including individuals, Hindu undivided families, trusts, universities, and charitable institutions.
    • The bond tenure is eight years with an exit option beginning the fifth year onwards. They will also be  These bonds can also be used as collateral for loans.

Reasons for the failure of the gold monetization  schemes

  • Generalized scheme
    • As per the study made, every group of consumers of gold has a different need in terms of incentive. In other words, a one-size-fits-all policy has not appealed equally to all classes of consumers.
    • Some are more willing to part with gold for investment purpose and some who are comparatively less willing. Thus, a targeted communication in terms of differential incentives is highly lacking. For example, the residents of Gujarat are comparatively more reluctant to invest in gold bonds or other gold monetization schemes, but they are one of the biggest consumers of gold in India. So, to attract that large chunk of gold into the economy, one needs to provide greater incentives for them than the other sections of the Indian population. But this step has not been taken.
  • Emotional attachment
    • Most of the gold stock in houses has a traditional attachment value. It is seen as a standard of increased status, has religious ritual value. Passing on of gold with generation and to a married daughter has a legacy notion attached to it.
  • Lack of awareness
    • One of the major reasons for the failure of the Scheme is the lack of awareness among the Indian consumers of gold. This result has been obtained after interviewing around 1171 households across India, belonging to various income groups.
    • There have been interviews of top executives of 6 banks, 5 refiners, and an industrial consultant also. This indicates that not enough steps have been taken by the government in spreading awareness of the merits of this new scheme.
  • Reluctance to part with gold
    • Other than the question of incentives, one can find a general reluctance to part with gold as a part of Indian culture. In villages, people have a general reluctance to part with gold for investment purposes. However, 74% of the rural consumers are willing to pledge their gold for a collateral purposes.
    • This indicates that they can only let go of gold for liquidity use only in case of basic requirements. There is an existence of a superstitious belief that gold must not be parted with, especially for such a long period. The statistics also show that a considerable section of gold buyers have other conceptions of holding gold which does not permit them to invest gold for the long term.
  • Low-interest rates
    • The interest rates are low which does not attract investments. The schemes have a maturity period. Gold is seen as equivalent to cash and considered liquid.
  • Certification
    • In India, barring metro cities, there are not many certificates providing jewelers. The deposition of these gold items after refining would mean that depositors would incur huge losses in terms of the purity of gold they hold.

India should use its temple gold reserve to lift the economy

  • A game-changer for the development 
    • Since the coronavirus pandemic began spreading its tentacles in India and the economic crisis became more pronounced, none of India’s top economists, policymakers suggested this measure. The government needs to do is that after declaring a financial emergency they need to take immediate steps to declare the huge stashes of gold reserves locked in the temple vaults as “government property”. The duty of the protection and the right for its financial use should be given to the Reserve Bank of India. This gold can be utilized under the Gold Monetization Scheme (GMS) to convert gold into monetary form.
  • India is currently ranked 11th according to the World Gold Council, with this measure India’s position can zoom to the zenith. Using the gold reserve, the government can then make full use of the JAM (Jan, Aadhar, Mobile) trinity to alleviate the economic woes of the masses.
  • Increase in Purchasing power- This re-monetization will help bring purchasing power into the hands of the people. Making use of surplus reserves of the non-core assets of the Central Public Sector Enterprises (CPSE), which will pay rich dividends in the fight against the pandemic. Devising an economic stimulus package worth over 5 percent of the GDP would help further.
  • Public investment can go up- Since private investment is projected to remain subdued for the near future, the gold assets can be used to bolster public investment. Public investment is the only lifeline that can save the country from degenerating to a path of a prolonged economic slowdown. The government must ramp up public investment to over 40 percent of the budgeted estimates (BE) in the fiscal year 2020-2021.
  • India should put in place suitable policies to emerge as a hub of manufacturing goods in the world. Steps can include tax holidays, setting up special economic zones (SEZ), and even liberalizing the taxation structure further to embrace globalization further. India must also team up with anti-China groupings to bolster the trade by gradually reducing its dependence on Chinese goods.


  • Extreme times call for extreme measures. India is reeling under a chronic economic crisis. If the Indian government takes these measures then it will go a long way in mitigating the economic fallout of the COVID-19.
  • The idea of utilization of the temple’s gold reserves even against their wishes can become a game-changer for the Indian economy in the coming decade. These efforts can certainly catapult India into the league of an economic superpower.

Mains model Question

  • Should India use its temple gold reserve for development is a great idea and need of the hour? Discuss