Gold’s Golden Shock: How Sovereign Gold Bonds Became India’s ₹1.5 Lakh Crore Burden
India’s love for gold is legendary, but in 2025, that love turned into a financial storm for the government. Once hailed as a masterstroke to reduce gold imports and support the rupee, the Sovereign Gold Bond (SGB) scheme has now evolved into one of India’s biggest fiscal challenges. With gold prices rising over 50% in the past year alone , the government’s total SGB liability has ballooned to ₹1.5 lakh crore , creating economic ripples from the RBI’s balance sheets to the Union Budget. The Rise of the Sovereign Gold Bond The SGB scheme was launched in 2015 by the Reserve Bank of India (RBI) on behalf of the Government of India. It aimed to discourage physical gold hoarding and reduce dependence on imports. Key Objectives: Curb Gold Imports: Limit the impact on foreign exchange reserves. Digitize Gold Investment: Create a safe, paper-based asset. Offer Guaranteed Returns: Provide 2.5% annual interest plus gold price-linked capital appreciation. Promote...