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Prime Minister Narendra Modi launching gold schemes on 5 November in New Delhi.PIB India

The gold deposit scheme launched by the Narendra Modi government recently has so far seen a weak response, attracting just 400 grams against the estimated 20,000 tonnes of gold held by households and institutions in the country.

On 5 November, Prime Minister Narendra Modi formally launched the gold monetisation scheme (GMS), under which the government plans to mop up gold worth nearly Rs 60 lakh crore from households and institutions in the country. Customers depositing gold with banks will get tax-free interest.

"Only 400 grams have been deposited so far," Anil Sankhwal, the northern regional chairman of the Gem and Jewellery Export Promotion Council, told Reuters.

Insufficient number of gold testing centres is preventing the scheme from taking off, and the government has "agreed to address" the issue, he added.

"The government has agreed to review the scheme and open more centres for gold testing and depositing in banks," he said.

Currently, there are 29 testing centres and four refineries working for the scheme. They will be increased to 50 and 20, respectively, by the end of 2015, said a Finance Ministry official.

However, the "India gold coin" with the Ashoka Chakra minted on it rolled out by the government this month is doing better, with the consumers having already bought 6,200 of them.

The government plans to sell nearly 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3,750 gold bullions through Metals and Minerals Trading Corporation of India (MMTC) outlets.

Earlier this week, Swiss brokerage UBS said the three gold schemes may have the potential to perform well, particularly in rural areas, compared to similar schemes rolled out earlier.

The firm also said interest rates, and demand and hedging of government gold liabilities could determine the scheme's impact on the economy.

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