There’s about 20,000 metric tons of gold stashed away in India’s temples and households — more than four times the amount that’s held in Fort Knox in Kentucky — and Narendra Modi wants to get his hands on it.
India’s prime minister on Thursday unveiled three state-backed plans to try to tap the stockpiles of the precious metal to trim physical demand and reduce imports by providing people with alternative avenues for investment. At an event in New Delhi, Modi announced the formal start of a gold-deposit plan, a sovereign-bond program linked to the metal’s price and introduction of locally minted coins, some bearing the face of Mahatma Gandhi.
India vies with China as the world’s largest gold consumer, and Modi’s administration wants to draw more of the holdings into the financial system to trim purchases from overseas and boost the country’s economic resilience. Bullion will be a help to India’s growth only when it enters the banking system, and large imports should be discouraged, Finance Minister Arun Jaitley said at the event in the capital, which comes a week before nationwide demand peaks.
“The expectations from the schemes in the short term must be tempered as it will take time to build the infrastructure and products and for customer acceptance to grow,” said P.R. Somasundaram, managing director at the World Gold Council in India. “We should see this announcement and launch as a strong indication of an intention to put gold at the heart of the financial system and make it work for the Indian economy.”
The estimate for nationwide holdings of about 20,000 tons came from Modi at the event as he described the stockpiles as idle. That compares with holdings of 147.3 million ounces (4,582 metric tons) squirreled away in the U.S. Bullion Depository in Kentucky, according to data on the U.S. Mint’s website.