19th September 2024

Article: 19^th September, 2024

Topic: Project Cheetah

Relevance: GS Paper: 3 – Environment

Source: Deccan Herald

Context

Concerns regarding the administration of Project Cheetah in Kuno National Park have been raised in a report by the Madhya Pradesh Accountant General, which highlights a “lack of coordination” between federal and state government agencies.

What is Project Cheetah?

• India’s cheetah relocation program is called Project Cheetah. Fifty cheetahs will be introduced over the course of five years in various National Parks as part of the project.
• The Indian government formally declared the cheetah to be extinct in 1952.
• Twenty adult African cheetahs have been brought into the country thus far, and they were placed in Kuno National Park.
• This represents the first known instance of a large carnivore being moved across continents.
• September 2022 saw the arrival of the first group of eight cheetahs from Namibia, and another batch of 12 cheetahs from South Africa arrived in February 2023.

• Eight mature cheetahs—five males and three females—have perished since coming to India.
• There are now 24 cheetahs in Kuno, including cubs, after 17 cubs were born in India, 12 of which survived.
  
  

Issues brought up in the report

• The audit noted that the management and work plans made no mention of reintroducing cheetahs, and that no records existed that explained the origins and methods of the reintroduction efforts.

• Rs 44.14 crore was spent on Project Cheetah between 2021–2022 and January 2024; however, it was discovered that this expenditure did not follow the approved management plan.
• Concerns concerning ground level planning and coordination were raised by the audit’s discovery that neither the cheetah reintroduction study nor site selection process involved ground staff or the Kuno Wildlife Division.
• The authorized management plan designated Kuno Wildlife Sanctuary as Asiatic lions’ second home, after Gujarat’s Gir forest.
  – But there had been no attempt to reintroduce Asiatic lions.
• According to the report, the former Divisional Forest Officer (DFO) of Kuno was transferred shortly after receiving training on cheetah management in South Africa and Namibia, rendering his expertise unavailable.
• Since the Action Plan requires trained personnel to stay at conservation sites for a minimum of five years, the audit declared this expenditure to be pointless.

Also Read Topics & Concepts:https://www.theweek.in/wire-updates/national/2024/09/16/del24-cheetah-audit-report.html

Mains Model Questions Q. Project Cheetah helps the nation manage its biodiversity and conserve its wildlife. Discuss the goals and related difficulties of the Government of India’s “Project Cheetah” in light of the statement.

Introduction:

Although cheetahs could be found throughout India, hunting, habitat loss, and other factors caused them to go extinct in the 1940s. Thus, in an effort to improve the lost biodiversity and restore ecological balance, the Government of India launched Project Cheetah, which involves reintroducing the African cheetah into appropriate habitats within the country. For instance, reintroducing cheetahs to Madhya Pradesh’s Kuno National Park.

Body:

The goals of the Project Cheetah:

• Restore a healthy population of Asiatic cheetahs in India, which are at risk of extinction and are currently thought to be critically endangered.
• The project aims to preserve the cheetah’s distinct genetic heritage, improve biodiversity, and restore ecological balance by reintroducing this species.
• Possibility of revitalizing India’s natural heritage and bolstering its dedication to protecting wildlife.
  bolster India’s reputation as a conscientious keeper of endangered species around the world.
• The project might draw ecotourism, creating jobs and raising awareness of environmental issues in the neighborhood.
  
  

Possible obstacles for Project Cheetah:

• Lack of appropriate habitats to support the cheetah’s reintroduction, i.e., habitats that complement Africa’s Savannah environment.
• Absence of large areas with lots of prey, enough cover, and few conflicts between people and wildlife.
• The absence of a secure environment free from poaching and habitat destruction is crucial to the long-term survival of cheetahs.
• The Asiatic cheetah population has a small gene pool and significant genetic fragmentation. The long-term survival of the species depends on maintaining genetic diversity throughout the reintroduction process in order to prevent inbreeding depression.
• Ineffective monitoring, community involvement, and poor adaptive management techniques all contribute to the possibility of human-cheetah conflicts.

Conclusion: In general, Project Cheetah is very significant for managing biodiversity and conserving wildlife in India. Its effective execution necessitates resolving the issues and can help restore keystone species, maintain ecosystem balance, and protect India’s natural heritage. The long-term survival of this amazing species and the general wellbeing of ecosystems depend on its efforts.

Article: 19^th September, 2024

Topic: Issues over gender discrimination

Relevance: GS Paper: 1 – Society

Source: PIB

Context

During his speech at SheShakti2024, the Indian Vice-President stressed the importance of being aware of the widespread but subtle gender discrimination that exists in society.

Various subtle forms of discrimination against women

• Stereotyping of Gender in Professional Roles: In India, a lot of jobs are still seen as belonging to either men or women. Stereotyping has an impact on hiring procedures, career advancement, and even the distribution of responsibilities in a work setting.
  – For example, the construction, engineering, and defense industries are frequently perceived as being dominated by men, whereas teaching, nursing, and caring roles are typically associated with women.
• Positions on Decision-Making: When women are routinely left out of important decision-making processes or when their perspectives are not given equal weight, subtle gender discrimination takes root.
  – Because of the ongoing “glass ceiling,” it is more difficult for women to reach the top management positions.
• Microaggressions in the Workplace: Microaggressions are little, common verbal or nonverbal slights that are frequently used as a cover for subtle gender discrimination.
• Domestic Responsibilities: Women are still expected to handle the majority of domestic work even as more join the workforce.
  – This dual burden is still a significant barrier to women’s advancement in the workforce even though it is frequently disregarded in official conversations about gender equality.
• Education and Guidance for Careers: Rather than being forced into perceived more male-dominated fields like technology or entrepreneurship, girls are encouraged to pursue safe, family-friendly careers.
  
  

Government actions to address this issue 

• Women’s Reserved Position in Local Governance: Women’s empowerment at the national level has been greatly aided by the 73rd and 74th Constitutional Amendments, which set aside one-third of seats in Panchayats and Municipalities for women at the grassroot level.

• Maternity Benefits (Amendment) Act of 2017: The Maternity Benefit (Amendment) Act, 2017 extended paid maternity leave from 12 to 26 weeks in an effort to lessen discrimination in the workplace.

• Women in STEM-related Initiatives: The government has launched a number of scholarships, mentorship programs, and initiatives like the Women Scientist Scheme to encourage greater participation in science and technology fields in recognition of the underrepresentation of women in these fields.

• Gender Budgeting: The government uses gender budgeting as a key instrument to assess how public spending affects gender equality.

• Stand-Up India Program: It facilitates women’s entrepreneurship by making funding easily accessible. Its goal is to support women-led businesses and self-employment.

• MUDRA Credit: It gives special recognition to female business owners. It makes financial support for startups and businesses run by women easier.
  
  

Way Forward

• Even though gender equality has been formally recognized in India through laws and policies, subtle forms of discrimination against women are still widely practiced and ingrained in society.
• It takes a multifaceted strategy to address these biases, involving not only legislative changes but also a shift in how society views gender roles.
• In order to remove these minor but important obstacles to full gender equality, the government must keep up its efforts. Proactive private sector initiatives and raised awareness are also essential.

Also Read Topics & Concepts:https://www.moneycontrol.com/news/india/women-empowerment-should-be-seen-in-a-holistic-manner-says-vice-president-jagdeep-dhankhar-12823149.html

Mains Model Questions Q. Analyze how the 73rd Amendment has affected women’s involvement in Indian local government. In what ways has this legislative modification aided in the grassroots empowerment of women?

Introduction:

The 1992 enactment of the 73rd Amendment to the Indian Constitution has had a significant influence on women’s participation in local governance and grassroots empowerment. This amendment included measures to guarantee increased representation of women in Panchayati Raj institutions (PRIs), and it required the establishment of a three-tiered system of PRIs.

Body:

Effect of the modification on female participation

• Enhanced Representation: A major increase in the number of women elected to Panchayats was brought about by the reservation policy. Women made up very little of the local government prior to the amendment.
• Millions of women have stepped into politics after the amendment, serving as Panchayat leaders and members.
• Leadership Positions: Women have participated as members as well as leaders, serving as committee chairs and sarpanchs (heads of villages). This has given them direct influence over decision-making procedures.
• Leadership Positions: Women have participated as members as well as leaders, serving as committee chairs and sarpanchs (heads of villages). This has given them direct influence over decision-making procedures.
  
  

Women’s Empowerment at the Grassroot Level

• Political Empowerment: By taking part in PRIs, women have given themselves a forum to express their worries and fight for their rights. This has questioned conventional gender norms and raised their profile in the political sphere.
• Capacity Building: Women’s leadership, negotiating, and public speaking abilities have improved as a result of their involvement in governance. A range of governmental and non-governmental entities have implemented training initiatives aimed at enhancing the abilities of female elected officials.
• Legal and Social Awareness: Women’s knowledge of their legal rights and entitlements has grown as a result of their exposure to governance. Their ability to confront social injustices like child marriage, domestic abuse, and dowries has increased as a result of this awareness.

Conclusion: Without a doubt, the 73rd Amendment has revolutionized women’s participation in local government in India. It has opened doors for them to become more involved in politics, grow as leaders, and have a bigger say in how their communities are shaped.

Article: 19^th September, 2024

Topic: India-US Strategic Clean Energy Partnership (SCEP)

Relevance: GS Paper: 2 – International Relations

Source: DD News

Context

The goals of the India-US Strategic Clean Energy Partnership (SCEP) Ministerial were to enhance collaboration in the areas of clean energy innovation, energy security, and the clean energy transition.

About

• The five main pillars of power and energy efficiency, responsible oil and gas, renewable energy, emerging fuels and technologies, and sustainable growth were reviewed during the meeting along with important accomplishments and upcoming projects.

• Strengthening bilateral cooperation on clean energy, the US-India Strategic Clean Energy Partnership (SCEP) prioritizes power, energy efficiency, renewable energy, emerging technologies, and sustainable growth.

The SCEP salient features include:

• Renewable Energy Technology Action Platform (RETAP): RETAP was established in August 2023 with the goal of creating workable plans for geothermal, offshore wind, hydrogen, and long-term energy storage technologies.
• The goal of the public-private Energy Storage Task Force is to investigate long-term energy storage options other than lithium-ion technologies, while also addressing safety, policy, and regulatory concerns.
• Assam and Haryana have initiated projects such as Battery Energy Storage Systems (BESS) that concentrate on grid integration and renewable energy storage.

• Modernization of Power Distribution: The discussion focused on India’s initiatives related to smart metering, reforms to the power market, and the goal of net-zero emissions by Indian Railways by 2030.

• India is leading the way in acquiring 1.5 GW of renewable energy continuously.
• A thorough workshop was held to promote partnerships, certification, and research and development related to sustainable aviation fuel (SAF) and transport electrification.
• The goal of India’s PM eBus Sewa program is to electrify medium- and heavy-duty transportation by deploying 10,000 electric buses by the end of the year.

• Methane abatement and carbon capture, utilization, and storage (CCUS): enhanced collaboration with India’s Directorate General of Hydrocarbons on methane abatement initiatives in the oil and gas sector, as well as enhanced cooperation on CCUS technologies and regulatory frameworks.

• Public-Private Partnerships: The importance of public-private discussions in forming regulations and bringing down the price of clean energy technology was stressed.
  
  

Clean Energy Is Needed

• Lessens greenhouse gas emissions, which contributes to the fight against environmental degradation and global warming.
• reduces reliance on finite fossil fuel resources.
• Clean energy improves general health outcomes by lowering pollution in the air and water.
• Long-term economic stability and job creation are promoted by renewable energy investments.
• Participate in the achievement of SDGs such as climate action (SDG 13) and clean energy (SDG 7).

Initiatives 

• The International Solar Alliance (ISA) is a global alliance headed by India that works to promote solar energy through cooperative initiatives among nations with abundant solar radiation.
• The US-Indian initiative known as the Renewable Energy Technology Action Platform (RETAP) is centered on geothermal, offshore wind, hydrogen, and energy storage technologies.
• The goal of the Green Hydrogen Mission (India) is to encourage the use of green hydrogen as a clean energy substitute, especially in transportation and heavy industries.
• EU’s Green Deal: A plan by the European Union to use investments and policies in clean energy to make Europe carbon neutral by 2050.
• The PM KUSUM Scheme (India) helps farmers lessen their dependency on fossil fuels by generating solar power for irrigation in agriculture.

Also Read Topics & Concepts:https://www.energy.gov/articles/us-india-strategic-clean-energy-partnership-ministerial-joint-statement

Mains Model Questions Q. Clean energy is the order of the day. Describe briefly India’s changing policy towards climate change in various international fora in the context of geopolitics. (UPSC PYQ 2022)

Introduction:

India now leads the world in clean energy, replacing its previous focus on energy security in its climate change strategy. Its pro-environment outlook is reflected in its diplomatic stance at COP. India highlights its commitment based on shared but distinct responsibilities by accepting net-zero commitments. India’s commitment and intent to take the lead in clean energy is demonstrated by the Panchamrit agenda, which sets ambitious goals for net-zero energy, carbon reduction, and renewable energy.

Body:

• Nationally Determined Contributions (NDCs) and the Paris Agreement: India was a key player in the discussions and ratification of the Paris Agreement. In its NDCs, it pledged to lower its emissions intensity and raise the proportion of power generation derived from non-fossil fuels.
• International Solar Alliance (ISA): To encourage the use of solar energy, India took the lead in founding the ISA, a forum for collaboration among nations with abundant solar radiation. This action established India as a global leader in renewable energy and demonstrated its dedication to clean energy.
• Geopolitical Influence: India wants to increase its geopolitical influence, which is demonstrated by its active involvement in climate change discussions and commitments. India wants to establish itself as a major player on the international scene and as a responsible one by joining the global climate change goals.
• Clean Energy Transition: The National Solar Mission and the Pradhan Mantri Ujjwala Yojana, which provide clean cooking fuel, are two of the domestic programs that India has started to promote clean energy. These programs show India’s dedication to lowering its carbon footprint and switching to greener energy sources.
• International Cooperation: India has looked to other countries for funding, capacity-building, and the transfer of clean energy technologies. In an effort to promote partnerships and garner support for its clean energy objectives, it has interacted with a number of nations and organizations, such as the US, the EU, and members of the International Solar Alliance.
• Climate Finance: India has underlined the necessity for developed nations to keep their promises to developing countries to support their efforts to mitigate the effects of climate change and adapt to them by providing financial and technological assistance.

Conclusion: India’s shifting stance on climate change in international fora reflects the country’s growing understanding of the importance of international cooperation and coordinated action. India is presenting itself as a responsible international player in the fight against climate change by actively participating in climate negotiations, supporting renewable energy, and working with other countries. This changing strategy supports the global endeavor to build a resilient and sustainable future for the earth.

Article: 19^th September, 2024

Topic: Regional disparities in agricultural lending

Relevance: GS Paper: 3 – Agriculture

Source: The Economic Times

Context

In his speech at the International Research Conference, the Deputy Governor of the Reserve Bank of India outlined several potential solutions to the problem of funding sustainable agriculture.

What is Sustainable agriculture?

• Farming methods that satisfy current food demands while protecting resources for future generations are referred to as sustainable agriculture.
• This entails implementing practices that save the environment, lessen dependency on chemical inputs, and make effective use of land and water.
• The goal of this strategy is to keep productivity, environmental health, and socioeconomic equity in check.
  
  

Advantages of environmentally friendly farming

• Preservation of the Environment: Sustainable farming improves biodiversity, conserves water, and lessens soil degradation.
• Economic Stability: Farmers can increase profitability by reducing their reliance on costly chemical inputs by implementing sustainable practices.
• Increased Food Security: By boosting crop diversity, improving soil health, and making sure farming systems are resistant to climate change, sustainable agriculture helps to ensure long-term food security.
• Social Equity: By giving small and marginal farmers access to markets, technology, and financial resources, cooperative models and FPOs enable them. This strengthens their negotiating position and guarantees that agricultural benefits are distributed equitably.
  
  

What challenges exist?

• Low Land Productivity per Unit: The majority of landholdings in India are small and dispersed, which makes it challenging for farmers to invest in sustainable practices or mechanize their operations.
• Over-reliance on Rainfall: About 60% of the cultivated area in India depends on monsoon rains, which are the main source of irrigation for the country’s agriculture. Farmers are therefore more susceptible to unpredictable weather patterns, particularly in light of climate change.
• Agricultural Price Volatility: During the busiest harvest seasons, farmers are forced to sell their produce for a discount due to price volatility.
• Post-harvest losses are caused by low levels of mechanization and limited agricultural processing capacity. Lower returns result from farmers’ inability to add value to their produce.
• Access to Finance: It can be challenging for small farmers to get loans and financial services. Large agribusinesses typically benefit from the formal banking system, leaving smaller farmers with less money to invest in environmentally friendly methods or equipment.
  
  

Actions made in support of sustainable agriculture

• Farm Producers Organizations (FPOs): FPOs have become an essential resource for helping small and marginal farmers by enhancing their market presence, aggregating their produce, and giving them access to technology.
• With the formation of over 24,000 Farmer Producer Companies (FPCs) by March 2023, farmers’ access to resources and market opportunities was greatly improved.

• Warehouse Receipt Finance: This type of financing enables farmers to hold onto their produce until later, when prices are higher.
• Priority Sector Lending (PSL): RBI regulations stipulate that loans up to Rs 2 crore for activities related to agriculture qualify as PSL, which helps to increase financing for FPOs.
• Better financial support for collective farming initiatives is ensured by loans up to Rs 5 crore under PSL for FPOs involved in assured marketing of their produce.
• Climate-smart agriculture (CSA): Integrated crop production systems with sophisticated water management, drought-tolerant crops, and sustainable land-use planning are among the practices that India has embraced.

• Technology Integration and Mechanization: Under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), government initiatives like the “Per Drop More Crop” program aim to promote water-efficient technologies like micro-irrigation.
  
  

Way Forward

• Recently, two urgent issues that have drawn attention from all across the world are climate change and sustainability. Sustainable agriculture shows up as a key remedy in this situation.
• This will entail improving agricultural commodities’ processing and preservation methods, converting traditional farming practices into technology-driven systems, and helping to add value at the farm level.
• Crop production systems must also be coordinated with climate-smart agriculture, and sufficient funding is required.

Also Read Topics & Concepts:https://www.aninews.in/news/business/adequate-and-timely-funding-key-to-achieving-sustainable-agriculture-rbi-deputy-governor-swaminathan20240916173951/

Mains Model Questions Q. Discuss about the significance of sustainable agriculture for India. How can the problems facing the Indian agriculture industry be addressed by sustainable agriculture practices?

Introduction:

In India, unsustainable farming methods have a detrimental impact on both the environment and public health. Adopting sustainable agriculture is essential to guaranteeing the nation’s agricultural sector’s long-term survival. Using cutting edge technologies can help farmers create farming systems that are sustainable.

Body:

The idea of sustainable agriculture and why it matters for India.

• Health: Long-term sustainability of the soil, environment, and local communities are given top priority in sustainable agriculture.
• Its main objective is to supply the growing demand for food without endangering the environment for coming generations.
• Goal: Sustainable agriculture protects the environment, human health, communities, and animal welfare while ensuring the production of food, fiber, and agricultural products.
• For the benefit of future generations, conservation emphasizes the preservation and renewal of vital resources such as soil, water, and air.
• Significance: Essential for India, as farmers face a great deal of difficulties as a result of diminishing soil fertility brought on by overuse of chemicals.
  
  

How can the problems facing the Indian agriculture industry be addressed by sustainable agriculture practices?

• Preserving Soil Fertility: Long-term increases in yield can be achieved by adopting sustainable farming methods, such as organic farming and minimal chemical use.
• Water management: Drip irrigation and precision farming maximize water use, strengthening agriculture’s resistance to water scarcity.
• Biodiversity Conservation: By combining trees, crops, and livestock, agroforestry helps to preserve soil quality, biodiversity, and sequesters carbon dioxide.
• Mitigation of Climate Change: By lowering greenhouse gas emissions, sustainable practices increase agriculture’s resilience to climate change.
• Decreased Production Costs: Farmers can save money by using precision farming and resource optimization.
• Better Market Access: Using sustainable farming methods can result in crops of a higher caliber, giving farmers access to direct markets and the ability to fetch higher prices.
• Job Opportunities: The agri-tech industry may see an increase in employment as a result of the adoption of sustainable technologies.
• Integration of Renewable Energy: Using wind and solar energy in agriculture lowers emissions and lessens reliance on fossil fuels.
• Automation and Robotics: Cutting-edge technologies minimize the use of pesticides and fertilizers, increase crop yields, and lower labor costs.

Conclusion: India can benefit both farmers and consumers by adopting sustainable agriculture practices that will increase agricultural productivity, lower production costs, and produce safer and healthier food. In addition to being essential, sustainable agriculture offers a chance to build a more robust and successful agricultural industry in the long run.

Article: 19^th September, 2024

Topic: India’s Gold imports doubled to record high

Relevance: GS Paper: 3 – Economy

Source: The Economic Times

Context

• According to data from the Commerce Ministry, gold imports more than doubled in August to a record high of USD 10.06 billion.
• The primary reasons for this are the continuous holiday demand and a sharp reduction in customs duties.
  
  

India’s Import of Gold

• More than five percent of all imports into the nation are made up of gold.
• After China, India is the world’s second-largest consumer of gold.
• The jewellery industry’s demand is primarily met by imports.
• With a 40 percent share, Switzerland is the biggest importer of gold, followed by the United Arab Emirates (16 percent) and South Africa (10 percent).
• India’s current account deficit (CAD) is influenced by its imports of gold, which decreased by 4.23 percent between April and July of 2024–2025.
• The government reduced the import duty from 15 percent to 6 percent in the Budget 2024.
  
  

Elements Affecting the Price of Gold:

• The relationship between supply and demand Prices are directly impacted by the supply of gold and the demand for it in the industrial and investment sectors.
• Gold is frequently viewed as a hedge against inflation. Prices rise as a result of investors turning to gold to protect their purchasing power when inflation rises.
• Interest Rates: When interest rates are lower, holding gold has a lower opportunity cost, which attracts more investors. On the other hand, as rates rise, gold prices fall.
• Geopolitical Stability: When there is political unrest or uncertainty, investors turn to gold for protection, which drives up demand and prices.
• Currency Strength: US dollars are usually used to price gold. For holders of other currencies, gold is more affordable when the dollar is weaker, which could lead to an increase in demand and price.
• Policies of Central Banks: The buying and selling of gold by central banks has a big impact on market prices. Gold is a common component of central banks’ reserves.
• Global Economic Conditions: When there are economic downturns or uncertainties, people want gold more because it’s a safe haven.
  
  

Effects of large imports of gold

• Trade Balance: If exports do not make up for increased gold imports, the nation’s trade balance deteriorates and the trade deficit grows. Pressure on the national currency may result from this.
• Currency Value: When demand for foreign currency rises, a high level of gold imports may cause the value of the home currency to decline.
• Inflation: Rising demand for gold may exacerbate inflationary pressures in the economy if it is being imported as a hedge against inflation.
• Investment Flow: High gold imports could be a sign of strong investor confidence in the metal as a secure investment, which could eventually draw in more foreign capital.
  
  

India’s Gem and Jewellery Industry

• India exported $6.87 billion worth of jewels and jewellery between April and June of 2024.
• The largest percentage of exports (53.47%) was made up of cut and polished diamonds, followed by gold jewellery (32.39%) and silver jewellery (3.36%).
• In June 2024, the value of gold jewellery imports was US$ 88.61 million, while the value of jewellery exports was US$ 608.01 million.
• The following are important centers for jewellery and gems: Delhi, Hyderabad, Kolkata, Jaipur, Surat, Mumbai, and Thrichor Nellore.
• By 2027, it’s anticipated that India’s exports of jewellery and gems will total $100 billion.
• The gem and jewellery industry were designated by the government as a focus area for export promotion due to its potential for growth and value addition.

Also Read Topics & Concepts:https://www.theweek.in/wire-updates/business/2024/09/17/del132-biz-ld-gold-imports.html

Mains Model Questions Q. The craze for gold in India has led to a surge in the import of gold in recent years and put pressure on the balance of payments and the external value of the rupee. In view of this, examine the merits of the Gold Monetization scheme. (UPSC PYQ 2015)

Introduction:

India is the world’s biggest importer of gold, mostly to meet the needs of the jewellery sector. The nation imports 800-900 tonnes of gold per year, measured in volume. In Indian culture, gold holds great significance as it is regarded as a potent means of enhancing one’s social standing and impressing others. In 2015, the Indian government unveiled the Gold Monetization Scheme. The Scheme’s goal is to mobilize gold that is held by national households and institutions, make it easier for them to use it for productive purposes, and eventually lessen the nation’s dependency on gold imports.

Body:

The following are a few explanations for the high levels of gold imports:

• Religious and Cultural Significance: Gold holds great cultural and religious importance in India. India is one of the biggest buyers of gold jewellery, making up around 25% of the world’s gold demand, according to the World Gold Council.
• Store of Value: Investors frequently look to gold as a safe-haven asset during uncertain economic times. The value that investors place on gold as a store of value and hedge against economic instability is demonstrated by the fact that global gold holdings increased significantly during the 2008 financial crisis and the ensuing economic downturns, according to data from the International Monetary Fund (IMF).
• Demand for Investments: Gold is generally more in demand for investments during times of financial market turbulence. According to the World Gold Council, there is a high demand for gold as an investment option, as evidenced by the record level of 734 tonnes of global investment in gold-backed exchange-traded funds (ETFs) in the first half of 2022.
• Jewellery Industry: A significant factor in the import of gold is India’s jewellery industry. Gold jewellery made up a sizeable portion of India’s gem and jewellery exports, which were valued at over USD 22 billion in 2020–2021, according to the Ministry of Commerce and Industry.
• Gold Loan Plans: People looking for loans with collateral tend to favor gold loan plans in nations like India. The Reserve Bank of India (RBI) reports that as of 2022, there were over INR 5.5 lakh crore in outstanding gold loans, demonstrating the popularity of such schemes and their potential impact on gold demand and imports.

The following is how the benefits of gold monetization can be perceived:

• Reducing Import Dependency: GMS contributes to lessening India’s reliance on imports of gold by mobilising the nation’s current gold holdings. India’s gold imports dropped to 446.4 tonnes in the fiscal year 2022–2023, the lowest in the previous five years. This decline can be partially attributed to the effectiveness of the Gold Monetization Scheme and other programs designed to lower gold imports.
• Interest Rates and Tax Benefits: GMS is a desirable choice for people looking to increase the value of their gold holdings because it provides competitive interest rates on gold deposits.
• Activation of Lazy Gold: The Gold Monetization Scheme (GMS) had collected about 29.64 tonnes of gold from Indian institutions and households as of March 2023.
• Enabling Gold Loan Programs: The GMS gives banks a dependable supply of gold for their gold loan programs. In March 2022, banks were able to provide gold loans to borrowers by mobilizing about 25.64 tonnes of gold through the Short-Term Bank Deposit (STBD) option.
• Enhancing Foreign Exchange Reserves: India can preserve its foreign exchange reserves by cutting back on gold imports via the GMS. By March 2022, the program’s gold mobilization could have prevented the nation from losing roughly USD 1.5 billion in foreign exchange.
  
  

Drawbacks of Gold Monetization Scheme

• Low Gold Mobilization and Participation: The total amount of gold mobilized under the GMS as of March 2023 was roughly 29.64 tonnes, which is comparatively low compared to India’s vast private gold holdings estimated to be around 25,000 to 30,000 tonnes.
• Limited Education and Awareness: The general public still knows very little about the GMS, even though it was introduced in 2015. Approximately 75% of respondents to a survey by the Indian Bullion and Jewellers Association (IBJA) were not aware of the program’s advantages.
• Low Depositor Incentives: Prospective depositors have expressed concern about the interest rates provided by the GMS. Interest rates on medium- and long-term deposits ranged from 2.25% to 2.50% as of March 2023, while rates on short-term deposits were fixed between 0.50% and 1.00%.
• Volatility of Gold Prices: The price of gold is prone to changes in the market. It’s possible that depositors are concerned about how price volatility might affect their returns. The volatility of gold prices could discourage some people from participating in the GMS.

Conclusion: New guidelines have been released by the Reserve Bank of India (RBI) after consulting with the government. The program will now be more accessible to prospective gold depositors thanks to new norms that permit early redemptions after three and five years, respectively, for medium- and long-term deposits. When it comes to the consumer side of the equation, these recommendations, if put into practice, can help ensure that GMS does not follow the same path as the GDS.