Whalesbook
Why GJC Wants Digital Gold
The All India Gem and Jewellery Domestic Council (GJC) is leading an effort to update India's Gold Monetisation Scheme (GMS), offering a new plan to the Reserve Bank of India (RBI) and the Ministry of Finance (MoF). The goal is to use the large amount of gold Indians own, estimated at over $2 trillion, to tackle economic problems, especially the Current Account Deficit (CAD) and reliance on gold imports. The GJC supports moving towards digital gold, as investors want easier and faster ways to manage money.
The GJC's updated plan aims to fix problems that have troubled earlier GMS versions. By involving jewellers more and helping turn physical gold into digital bank balances, the GJC hopes for more people to join. This approach could change gold, coins, and jewellery from assets that don't earn interest into financial tools that do, making investments work better without needing to sell the gold immediately. With gold prices high, around ₹15,000 per gram for 24-carat gold as of April 2026, there's significant wealth locked away that could enter the formal economy.
How Digital Gold Helps India's Economy
The main idea of the GJC's proposal is a formal shift to digital gold. This involves changing physical gold into digital balances held in bank accounts. This system would let people earn returns on their idle gold, including bullion, coins, and jewellery, turning them into formal financial tools. This fits a growing trend in India where investors prefer digital options like Gold ETFs and online platforms because they are cheaper, safer, and easier to access.
The economic benefits are significant. Getting idle gold to work could greatly lessen India's need for imports, which make up 85-90% of yearly demand, costing over $50 billion and worsening the trade deficit and CAD. For example, gold imports jumped to $12.07 billion in January 2026 alone, widening the trade deficit. Increasing domestic supply could help ease the CAD, which was $13.2 billion in the December 2025 quarter. A regulated digital system should also make the sector official, improve rules, and boost market performance.
Past Attempts Faced Problems
Gold monetization efforts in India have had little success. The Gold Monetisation Scheme, started in 2015, collected only about 31.16 metric tonnes between 2015 and 2025, a tiny part of yearly imports. Few people joined because of sentimental value for jewellery, worries about purity checks and melting, and low interest rates. The medium and long-term deposit parts were stopped in March 2025, leaving only short-term deposits up to banks.
The proposed digital gold system also faces difficult regulations. Digital gold is mostly an unregulated product, not watched by the RBI or SEBI, creating risks from other parties. An SRO led by the India Bullion and Jewellery Association (IBJA) is set to start by April 2026 to fix these issues, but the current system doesn't offer strong investor protection like SEBI-regulated products. The GJC's plan needs to solve these trust issues and unclear rules for wider use.
Reasons for Doubt
Big challenges remain for the proposed Gold Monetisation Scheme update. The strong cultural and emotional value of physical gold, especially jewellery, is a major barrier to putting it into formal schemes. People often see their gold as a family heirloom, making it hard to melt or deposit it for interest, even if it's good.
The past poor results and issues with GMS, plus the new and unregulated digital gold platforms, create doubts about investor trust and if the scheme can meet its goals. The huge challenges include checking purity, keeping gold safe, and offering easy returns at good rates for all kinds of gold items, from old coins to modern jewellery. The risk of scams or platform failures in digital gold, even with the new SRO, is real and could damage trust. The GJC plan needs to strongly tackle these deep issues of feelings, trust, and practical steps to avoid past mistakes and use India's huge gold wealth for economic good.
Looking Ahead
If the GJC's plan gets approval and solves trust and practical problems, it could be a big step in using India's huge private gold wealth. The plan for a digital system involving jewellers offers a more modern and easier way than older GMS versions. Experts have said that even a little bit of household gold joining could bring a lot of money into the economy and cut import costs. Success depends on regulators creating a strong, open, and investor-friendly digital gold system that balances economic needs with India's special cultural ties to gold.