Caressing delicate bangles she hasn't taken off since her wedding 11 years ago, Geetanjali Agarwal says she won't hand over her gold to the government, as it wages a campaign to make the nation's hoard of the precious metal more productive. "For a woman to part with her jewelry, that is very difficult," said the 38-year-old New Delhi housewife, who also buys gold coins at the Indian festival of Diwali as an investment. "My daughter is 10 years old and I'm already collecting pieces for her." Industry experts say India has around 20,000 tons of the precious metal lying idle in Hindu temple vaults, bank safes and jewelry boxes — a trove worth about $700 billion at current prices depending on purity levels. The country vies with China for the title of the world's biggest consumer of gold — for centuries considered a precious store of wealth — and imported about 900 tons last year, its second biggest import after oil. Now the government is encouraging people to lend their gold to banks through the Gold Monetization Scheme starting in November, hoping to bring the national stash into the economy. Households or temple trusts deposit their gold with banks and earn tax-free interest, so the idea goes, and banks then lend it to jewelers and a valuable asset is brought into circulation. "A lot of people, particularly women and those in remote rural areas, hold jewelry which is lying idle in India, which is not taken as an investment," Gopal Krishna Agarwal, economic affairs spokesman for the ruling Bharatiya Janata Party, said. "(This scheme) can earn some return for those persons." But many, such as Poonam Vohra, a housewife from the capital's middle-class suburb of Rajouri Garden, say they are unsure about handing over their treasures. "Gold is a really expensive buy and as it is we don't have much, so whatever we have we'd rather keep," said the 52-year-old, who keeps most of her jewelry in a bank vault after being robbed of a gold chain while walking in Delhi. With little state social security to fall back on, gold is a vital safety net in India, in particular for women, for whom it may be the only savings they have. It is especially important in rural areas where many people do not have access to the formal banking system. "Whenever there's a wedding or some function I take it out," Vohra said. "Maybe it will be my child's wedding in six months. I don't want to give it away." A similar scheme in 1999 was a near-total failure, thanks to low interest rates. The government promises the new scheme is different, with the minimum deposit lowered from 500 grams to just 30 grams — roughly the same as three gold bangles. Banks will be allowed to set their own interest rate, expected to be between two and four percent, and post offices will boost the scheme's reach in rural areas. One fear is that households may face uncomfortable questions about where their gold came from, amid an intensifying crackdown on "black money." "People are still bothered about the tax queries. There is a myth that all Indians hold gold as unaccounted wealth," said Somasundaram P.R., managing director of the World Gold Council India. Another sticking point is that gold has to be melted down to test its purity — though depositors can watch from a gallery — with the risk it could turn out to be worth less than thought. For jewellers in Delhi's Karol Bagh, where the streets are lined with shops selling diamonds and antiques, monetizing India's gold stash would be good news, reducing the need for expensive imports.
