Depends on the interest

This is in response to your editorial, ‘Another gold hunt’ (May 22). We are one of the largest consumers of gold, and import up to 1,000 tonnes every year. The gold monetisation scheme had been earlier rolled out in 1999 but it failed to incentivise depositors. Considering the quantity of gold Indians hold, the present proposal should be marketed carefully.

Indians have a sentimental attachment to jewellery. If the government wants all the idle stocks to come out, they should agree to tax-free interest on gold deposits. But the success of the scheme depends on the interest rate offered. Without regulatory exemptions, banks themselves may not be keen on pushing this scheme.

Vivek George

Mavelikara, Kerala

While this is a welcome move, one is not sure what the formalities are. It would mean increasing the manpower in institutions because banks do not have the required expertise . The difference in valuations and rate fluctuationneeds expert monitoring. Complex calculations for daily fluctuation and interest payment needs to be explained. Also gold jewellery inlaid with diamonds and precious stones require more complex valuation.

Banks would have to factor in inventory cost and also the safety of the ornaments. Further, the taxmen monitoring the gold would dampen the gold deposit scheme. The amount could have been increased to 100 grams; 30 grams is a small amount yet it will increase the operating cost of banks. Purity will always be an issue: How will banks deal with this? We need more guidelines to ensure it is a success.

Kamal Anil Kapadia

Mumbai

It is estimated that gold reserves with Indian families is around 20,000 tonnes. With the gold monetisation scheme even if we manage to get 1 per cent of this, it will come to 200 tonnes. Last year we imported around 950 tonnes of gold at a cost of $35 billion. So in effect we can reduce our gold imports by 20 per cent. This gold can be lent to jewellers, which will not attract the 10 per cent duty.

But to make this scheme a success, the government should announce that the income tax department will not issue notices to those who deposit gold up to a certain extent. This will make people confident enough to part with their gold for interest income. When the gold is melted when we deposit with a bank, will there be a capital gains tax of 20 per cent with indexation? This issue should be clarified.

CR Arun

Email

Give seniors a break

Senior citizens face severe financial strain at the fag end of their lives due to medical expenses and other routine unavoidable household expenses which are increasing day by day. A majority of them depend on interest income from fixed deposits in banks although the income is not at all sufficient to make ends meet. The government has decided to make TDS applicable even to RDs and FDs kept with co-operative banks. This is a highly retrograde step. There is no forum to voice the difficulties of senior citizens, who are already neglected by their own wards due to many reasons and they are forced to shift to old age homes which also charge hefty rents.

There are umpteen avenues for the government to raise resources instead of TDS on FDs. Scams could be avoided if bank interest is tax-free. If black money is brought back into the mainstream, the government can easily meet its budgetary deficits.

S Hariharan

Chennai

Heed farmers’ woes

This refers to the report ‘MSP may be a thing of the past’ by KV Kurmanath (May 22). As many as three lakh farmers have taken their lives in the last 20 years. Fixing MSP alone may not do since there are varied issues such as failure of monsoon, crop loss, loans, accumulated debts, products fetching inadequate returns and so on. Each of these calls for different solutions. We need a standing panel of experts to continuously monitor their problems and devise solutions. The MSP should also be revised for every season based on the total inputs and reasonable profit. The government should buy the grains when there is a market glut.

TR Anandan

Coimbatore

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