Fifty years ago | Gold sales suggested to mop up savings
This archival piece from 1974 discusses a proposal for the Indian government to sell gold in rural areas to mobilize savings. Economists suggested using foreign exchange reserves or RBI gold to tap into the rural preference for gold over traditional financial instruments.
Why it matters
It highlights historical economic policy debates regarding financial inclusion and the cultural significance of gold in rural India.
New Delhi, August 4: The Union Government is understood to be examining a suggestion that it should utilise the present foreign exchange reserves for the purchase of gold in the international market and sell it in the rural areas as part of a concerted drive to mop up the savings from these areas.
This novel suggestion is among a few others put forward by several economists for stepping up the mobilisation of savings to augment the resources for the Fifth Plan.
It has also been suggested that there may be some difficulties for the Government itself to buy gold abroad, but the State Trading Corporation could be asked to buy the gold from the Trust Fund of the International Monetary Fund. It has further been suggested that part of the gold reserves available with the Reserve Bank of India could also be used for internal sales in the rural areas.
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