The government wants to capitalise on the large cache of gold held by Indian households. The success of the schemes will depend upon their efficiency and attractiveness.

Our obsession with gold runs deep. It is estimated that Indian households hold about 25,000 tonnes of gold. In comparison, the US treasury holds about 8,000 tonnes of gold and RBI less than 600 tonnes. The approximate value of gold privately held in India is about `50 lakh crore that is 35% of our GDP and 60% of our bank deposits. The government now wants to tap this hoard and put it to use.

Gold in itself is not a productive asset in a household. It earns no interest or dividend. But its lure as a store of undiminishing value makes it precious. If there is a crisis, you can flee with gold and begin life anywhere in the world. It is not easy to modify the sense of security a saver associates with gold.

Gold is easy to buy, sell and transfer. It is ideal for hiding ill-gotten cash. When a mother takes her gold chain from her neck and places it on her daughter's, the gold has been effectively transferred. No capital gains, no taxes, no registration. Unbanked India depends on gold for liquidity needs, pawning it from time to time. Unless a gold bond or deposit matches this ease, India's gold hoard will be tough to woo. Also, women may not particularly like wearing deposit certificates around their necks and wrists.