The government will have to pay its Sovereign Gold Bond investors ₹12,06,92,00,00,000 if it were to redeem all outstanding bonds as of yesterday (April 1, 2025). That is a little over ₹1.2 trillion, or ₹1.2 lakh crore, with April 1 gold price of ₹9,284/gram.
The government, in a written reply to the Parliament, has said that “the outstanding value as on March 20, 2025 on issue price is ₹67,322 crore for 130 tonnes of gold.” According to a report by CNBC TV18, this means that in absolute terms, the Centre’s liability has increased 79 per cent from its original debt it had taken when it issued SGBs. The amount also does not include the interest it has to pay SGB investors on their investments.
SGB investors must keep in mind that the government has already fully redeemed 7 tranches of these gold bonds. It recently offered to prematurely pay out the money to SGB subscribers of the 8th tranche.
How much will the government pay to SGB investors?
In a relief, however, the government will not have to shell out the money for all the SGBs at one go. The final tranche of the SGB will be redeemable in 2032.
That being said, gold prices have been skyrocketing for months now. If they continue to rally like present, and if SGB investors plan to hold their investments till maturity, the government will have to shell out a much higher amount.
Since the issuance of the first tranche of SGB in 2015, gold prices have rallied 252 per cent. The government had to pay out a 128 per cent premium to SGB investors of the first tranche without interest. With interest, the premium surged to 148 per cent.
What did the govt tell Parliament on SGBs?
The government has issued a total of 67 tranches of Sovereign Gold Bonds (SGBs) amounting to 146.96 tonnes of gold till 2024-25, Parliament was informed on Tuesday.
The outstanding value as on March 20, 2025, on issue price is ₹67,322 crore for 130 tonnes of gold, Minister of State for Finance Pankaj Chaudhary said in a written reply.
The government has maintained a Gold Reserve Fund (GRF) in the Public Account where the price and interest differential amount is credited in time, he said.
The SGBs, in addition to other borrowing instruments, have been an instrument for raising resources for financing fiscal deficit, he said. However, in addition to these, SGBs also served the purpose of savings/financial instruments as an alternative to physical gold, he said.
Due to the recent gold price volatility and global economic headwinds, this form of borrowing has become relatively expensive.
“Therefore, based on maturing and deepening of Indian G-Sec market, which helped in mobilising relatively low-cost borrowing, resources were not raised through SGBs in FY 2024-25,” he said.
