When the government launched the Sovereign Gold Bond (SGB) scheme, it seemed like a great scheme. Investors got great returns, but it turned out to be a loss-making deal for the government. Due to rising gold prices, investors made profits, but a huge financial burden increased on the government. Perhaps the government took Indians’ love for gold lightly and this became its biggest mistake.
Pressure on the government due to rising debt burden
The Reserve Bank of India (RBI) currently holds 879 tonnes of gold, which is 11.5% of its total foreign exchange reserves—the highest level ever. This shows that the government and RBI are under great financial pressure due to the SGB scheme.
Parliament was recently informed that the government has so far issued 67 tranches of sovereign gold bonds (SGBs) totaling 146.96 tonnes of gold until 2024-25.
Also read: Govt issues 67 tranches of Sovereign Gold Bonds till FY25
The government did not issue any new gold bonds in FY 2024-25. In the last financial year 2023-24, the government had raised Rs 27,000 crore, but now it seems that the government cannot continue this scheme due to increasing liabilities and financial pressure.
Till April 1, 2025, the government was required to pay Rs 67,322 crore — that is, the total value of all the gold bonds issued so far. According to Minister of State for Finance Pankaj Chaudhary, the total liability of 130 tonnes of gold bonds issued till March 20, 2025 has become Rs 67,322 crore.
Liability increased by 930%, a big concern for the government
According to the budget documents, the government’s SGB liability was Rs 6,664 crore in 2017-18, which increased to Rs 68,598 crore in 2023-24 — a huge increase of 930%.
So far, the government has issued gold bonds equivalent to 147 tonnes of gold. But in the current situation, the government’s liability has reached 132 tonnes Rs 1.2 lakh crore or $13 billion). These bonds will mature by 2032, meaning the government will have to face more financial pressure in the coming years.
Also read: Govt’s Gold Bond Gamble: Windfall for investors, disaster for the centre?
Huge losses to the government due to instability in policies
Despite the gold bond scheme, India’s annual gold import cost remained around $37 billion.
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