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| Gold Monetization: An Alternative to overwhelm Financial and Liquidity Crisis | | COVID -19: Economic Crisis | |
Vishal Singh
The Outbreak of Novel Coronovirus ( COVID-19) with wuhan as its epicentre has subsequently led the entire world and as well as India to observe a nationwide shutdown.
On 24 march, 2020 Prime Minister of India, Shri Narender Modi announced world biggest nationwide lockdown as a preventive measure against this pandemic thereby restricting the movement of 1.3 billion population.
After a period of 55 days of lockdown, on 18 May, 2020, India entered 4th phase of lockdown which has induced severe economic disruption in the country .
The lockdown has led to a halt of manufacturing units, disturbance in demand -supply chain and left millions of short term and casual workers jobless.
In a big push to revive the covid - hit economy, PM of India announced a mega stimulus relief package of 20 lakh crore which will focus on land, labour, liquidity, laws and to make india self - reliant.
No doubt the implementation of such a big package requires huge funds and unfortunately the country is already facing an economic and liquidity distress. To overcome such an economic crisis, gold monetization of religious trusts and households could be an alternative. Gold is considered an equivalent for liquid cash and can be converted to cash anytime when an emergency arisis.
In an attempt to mobilise idle gold lying in households and religious institutions and to facilitate its reuse for economic activities, the Govt. of India announced Gold Monetization Scheme in Nov. 2015.
The modus operandi of Gold Monetization Scheme was to encourge people to deposit their idle gold and earn income from it without losing ownership of yellow metal and to reduce the country's reliance on import of gold and foreign exchage outflows.Higher import means a higher current account deficiet i.e when value of imports exceeds the value of products it exports which puts a pressure on the economy and also devaluates its currency.
According to a report of World Gold Council, India is second largest consumer of gold after China and it is estimated an approximate of 24000 - 25000 tonnes of gold with 20000 tonnes in households and 4000 tonnes lying in temples of India. As estimated, monetizing 20℅ of this 24000 tonnes of gold will ensure a liquidity of 26 lakh crore which can be used to overwhelm the crisis.
In emergent and alarming situations and in the interest of nation, the country must adopt a mandatory gold deposit policy as once US did during during great depression from 1929- 1941. The then president of US, Franklin Roosevelt in 1933 issued an executive order no. 6102 which prohibited private holding of gold. Americans responded positively partly by virtue of nationalism and partly by fear of law. But such a move is not so feasible in a country like india where many religious institutions are reluctant to part with gold monetization and deposit scheme because of their religious and emotional sentiments attached with it .
Moreover the move of govt. to make such scheme mandatory could also have legal implications arising those with violation of right to freedom of religion under Art. 25 and 26 of Indian constitution.
In short , in the interest of economic prosperity of the country, the heads of various religious trusts and also the citizens of country should come forward to turn their idle gold from 'dead money to life strengtheing tool' as earlier eight temples from all over India and many citizens have deposited their gold under gold monetization scheme. |
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