20/11/2015 4:50 PM IST | Updated 15/07/2016 8:25 AM IST

Modi's Gold Scheme Has Only Drawn 400 Grams Out Of Potential 20,000 Tonnes

Investing in Gold/Flickr
One kilogram of gold bars, gold bullion and Wiener Philharmoniker of each one troy ounce.

A gold deposit scheme launched amid fanfare by Indian Prime Minister Narendra Modi two weeks ago has so far attracted only 400 grams, an industry official told Reuters on Thursday, out of a national hoard estimated at 20,000 tonnes.

Modi has urged Indians to put gold stashed in homes and temples in the bank, offering modest rates of interest that earlier schemes have lacked. His government has also launched 'paper' gold in the form of gold-backed bonds.

The overarching aim is to get Indians to ultimately save in more liquid forms of wealth than freeze up their gains in immobile assets such as gold. Gold also makes it harder to track sources of wealth.

A shortage of centres to assay the gold being put on deposit is a problem that the government has agreed to address, Anil Sankhwal, the northern regional chairman of India's Gem and Jewellery Export Promotion Council, told Reuters.

Another bandied scheme, that hasn't brought the Modi government much wealth, is the black money law.

The government had announced a scheme called The Black money (Undisclosed Foreign Income and Assets) and Imposition of Tax provides for tax and penalty of 120 per cent and jail term of up to 10 years for holding undisclosed foreign assets. It had also provided a 90-day compliance window--that ended on Wednesday-- to escape the harsh punishment by declaring the assets and paying 60 per cent tax and penalty.

However, as of October, the government gleaned no more than 3,700 crore as opposed to the $44 billion that is estimated to flow out of the country as black money.

The rules stipulated that no action will be taken against those coming clean, unless the money was related to drugs, corruption or terrorism.

With inputs from Reuters

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