The sharp rise in gold prices – over 35% in this financial year – has seen the government’s outstanding debt on sovereign gold bonds (SGBs) spiralling to a record Rs 1.5 lakh crore.

The current total SGB outstanding is 126 tonnes. And at current prices, the per tonne price of gold is Rs 1,241 crore per tonne. The simple average of issue prices of the last 58 issues (that have not completed 8 years for redemption) is Rs 4,227 per gram. Since the government is paying 2.5% interest (on the purchase year’s price) on this gold every year, at current prices of gold, the government’s debt has increased by approximately 200%.

Shekhar Bhandari, President, Kotak Mahindra Bank, said that, “The Indian government faces significant liability due to SGBs, primarily because of the rising gold prices. Th

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