India Eyes Voluntary Gold Disclosure Scheme Amid Forex Crisis

The Indian government is considering a voluntary gold disclosure scheme to reduce imports and preserve foreign exchange.

This proposal comes as India's forex reserves have plummeted to just $1.1 billion in June, barely enough to cover two to three weeks of essential imports.

The Reserve Bank of India has proposed pledging 50 tonnes of gold to raise foreign exchange, which was approved by the caretaker government led by Chandra Shekhar but executed post-general elections by the new government under Prime Minister PV Narasimha Rao and his Finance Minister Manmohan Singh.

The government plans to collect gold lying idle in private hands and put it to use to reduce imports. This is not a new idea, as India has leveraged its gold reserves during emergencies in the past.