Context:
With an increased emphasis on reducing government debt, the finance ministry is considering discontinuing the issuance of Sovereign Gold Bonds (SGBs) from the next financial year (2025-26).
Key Highlights:
- The maturity return has to be made to the SGB investor in value of gold to his account, thus increasing the liability and fiscal burden on the government.
- As from FY27, the government shall work on reduction of the physical gold imports to reduce the debt to Gross Domestic Product ratio.
- More details on the debt-reduction measures will be announced by Finance Minister Nirmala Sitharaman during the FY26 Budget presentation.
Sovereign Gold Bonds (SGB)
- SBG was inaugurated by the government of India on 30th October, 2015.
- A government security that is rated in grams measured by the amount of gold purchased by investors.
- Available by the Reserve Bank of India, on behalf of the Government of India.
- Investable for Individuals, HUFs, Trusts, Universities, and Charitable Institutions.
- Investment limits: Rs.1 gram of gold is the minimum investment to Rs.20 kg in one financial year.
- Tenures: The duration of the bond is considered 8 years with exit options made available in the 5th, 6th, or 7th years.
