&imwidth=800&imheight=600&format=webp&quality=medium "India needs a policy to define gold as a commodity or money: Report")
The State Bank of India (SBI) stated in a report that the Indian government should establish a policy that defines gold as a form of currency. It stated that the policy must clarify whether the precious metal is treated as a commodity or money, and how the country's people perceive it.
The report noted that in Western countries, gold has achieved the status of public property, unlike nations like India, Japan, South Korea, and China, where gold is viewed as private investment.
The report further said that there should be guidelines for the perception of gold.
"The time has now come to conceive a comprehensive policy on gold, and for such, it is important that one defines what gold is (commodity or money) and how gold is perceived by its ultimate consumer," it added.
India's gold policy currently focuses on reducing the demand for the metal and recycling existing stocks for use.
The report said monetizing gold can have a positive impact on investments because the metal represents a source of funds without contributing to capital formation.
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The report further said that China's central bank holds a whopping 2300 tonnes of gold. India holds only 880 tonnes of the metal.
Chinese households hold less than an average of 10 grams of gold, whereas Indian families hold 25 grams of the metal.
Commercial banks in China are involved in gold operations at various levels along the production and supply chain. In India, banks are largely restricted to financing the gems and jewelry sector, exporters, and gold deposits.
China is also the largest producer of gold in the world. In India, experts predict that gold reserves are available for mining in Madhya Pradesh, Odisha, and Andhra Pradesh.
The report said India's policies on gold revolved around six elements -- encouraging people to invest in other asset classes, regulating gold supply, curbing smuggling, reducing household demand for physical gold, keeping domestic gold prices low, and ensuring exchange rate stability and financial balance.
However, these measures were aimed at reducing the demand for physical gold and were short-term in nature.
It said in India's gold policy, the importance of the metal in geopolitics wasn't discussed.