Government launches a sovereign gold bond scheme

The Government launched the Sovereign Gold Bond Scheme as an effort to reduce gold imports and to decrease the current account deficit of India which had widened to a four-quarter-high at 2,4% of GDP in April-June period because of the increasing crude oil prices. It will provide a superior alternative to holding gold in physical form by eliminating the risks and costs of storage. The scheme will offer 2.5% interest rate and redemption will be exempted from capital gains tax. Sovereign gold bonds will have a tenure of eight years with an exit option in the fifth, sixth and seventh year. They will be sold through various banks, Stock Holding Corporation of India Ltd, designated post offices and recognized stock exchanges as stated by the Finance Ministry.