SOVEREIGN GOLD BOND SCHEME 2021-22

THE CONTEXT: In terms of Government of India Notification, Sovereign Gold Bonds 2021-22 (Series IV) will be opened for the period July 12-16, 2021 with Settlement date July 20, 2021.

Analysis

  • The issue price of the Bond during the subscription period shall be Rs 4,807 (Rupees Four thousand eight hundred seven only) – per gram.
  • The Government of India in consultation with the Reserve Bank of India has decided to allow discount of Rs 50 (Rupees Fifty only) per gram from the issue price to those investors who apply online and the payment is made through digital mode.
  • For such investors the issue price of Gold Bond will be Rs 4,757 (Rupees Four thousand seven hundred fifty seven only) per gram of gold.

THE FEATURES OF THE BOND ARE AS UNDER:

Item Details
Product name Sovereign Gold Bond 2021-22
Issuance To be issued by Reserve Bank of India on behalf of the Government of India.
Eligibility The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
Tenor The tenor of the Bond will be for a period of 8 years with exit option after5th year to be exercised on the next interest payment dates.
Minimum size Minimum permissible investment will be 1 gram of gold.
Maximum limit The maximum limit of subscription shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
Payment option Payment for the Bonds will be through cash payment (up to a maximum of `20,000) or demand draft or cheque or electronic banking.
Issuance form The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
Redemption price The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous 3 working days published by IBJA Ltd.
Sales channel Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognized stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
Interest rate The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.
Collateral Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
Tax treatment The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Tradability Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
SLR eligibility Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.

SIGNIFICANCE OF SOVEREIGN GOLD BOND SCHEME

  1. Firstly, these gold bonds allow you to get a lower price than physical gold when applied online.
  2. Secondly, you get a fixed interest rate on these gold bonds.
  3. Thirdly, gold bonds have no holding or storage cost.
  4. Fourth, these bonds carry a sovereign guarantee since they are issued by the government.
  5. Fifth, another benefit of sovereign gold bond scheme is that there is no capital gains tax at maturity or redemption for individual investors. Also, there is indexation benefit if the same is transferred before maturity for non-individual investors. The interest earned is taxable. There is no TDS either during redemption or interest payout.
  6. Sixthly, a sovereign gold bond is highly liquid. This is because the investment can be used as collateral for loans.
  7. Lastly, It will reduce pressure on the Current Account side of Balance Of Payment


SDGS REPORT 2021: COVID-19 LED TO FIRST RISE IN EXTREME POVERTY IN A GENERATION

THE CONTEXT: The ‘Sustainable Development Goals Report 2021’ highlights the impacts of COVID-19 on SDG implementation and identifies areas that require urgent and coordinated action.

Analysis

  • The report was launched on the first day of the 2021 session of the High-level Political Forum on Sustainable Development (HLPF). 
  • The report is prepared annually by the UN Department of Economic and Social Affairs (UN DESA) using data and estimates in the Global SDG Indicators Database.
  • The Global SDG Indicators Database contains global, regional and country data and metadata on the official SDG indicators.
  • The database uses information from custodians for each SDG indicator, and specifies whether the national data were adjusted, estimated, modelled, or are the result of global monitoring.
  • The report indicates there has been progress in the availability of internationally comparable data on the SDGs, with the number of indicators included in the global SDG database having increased from 115 in 2016, to around 160 in 2019 and 211 in 2021.
  • Despite this increase in the number of indicators, the report notes the global pandemic disrupted data operations, such as population censuses, around the world.
  • A survey of national statistical offices indicates about 42% of countries had to postpone censuses scheduled for 2020 or 2021 for at least one year.
  • Some of the report’s findings are that the global extreme poverty rate rose for the first time in over 20 years, 119 to 124 million people were pushed back into extreme poverty in 2020, and an additional 101 million children have fallen below the minimum reading proficiency level.

High-level Political Forum on Sustainable Development (HLPF) 

  • The HLPF is the main UN platform on sustainable development.
  • It has a central role in the follow-up and review of implementation of the 2030 Agenda for Sustainable Development and it’s Sustainable Development Goals (SDGs).
  • All UN Member States as well as representatives from civil society organizations participate in the HLPF, which meets under the auspices of the UN Economic and Social Council (ECOSOC). 
  • The 2021 session of the High-level Political Forum on Sustainable Development (HLPF) will be the ninth session of the HLPF.
  • A key feature of the annual HLPF session is the presentation of Voluntary National Reviews (VNRs).
  • In 2021, 43 countries plan to present VNRs and discuss their progress and challenges in implementing the SDGs.


11 PEOPLE DIE OF HUNGER EACH MINUTE AROUND THE GLOBE: OXFAM REPORT

THE CONTEXT: The anti-poverty organization Oxfam says 11 people die of hunger each minute and that the number facing famine-like conditions around the globe has increased six times over the last year.

Analysis

  • In a report titled “The Hunger Virus Multiplies,” Oxfam said that the death toll from famine outpaces that of Covid-19, which kills around seven people per minute.
  • The humanitarian group also said that 155 million people around the world now live at crisis levels of food insecurity or worse – some 20 million more than last year.
  • Around two-thirds of them face hunger because their country is in military conflict.
  • “Today, unrelenting conflict on top of the COVID-19 economic fallout, and a worsening climate crisis, has pushed more than 520,000 people to the brink of starvation,”
  • “Instead of battling the pandemic, warring parties fought each other, too often landing the last blow to millions already battered by weather disasters and economic shocks.”
  • Despite the pandemic, Oxfam said that global military spending increased by $51 billion during the pandemic – an amount that exceeds by at least six times what the U.N. needs to stop hunger
  • Starvation continues to be used as a weapon of war, depriving civilians of food and water and impeding humanitarian relief.
  • People can’t live safely or find food when their markets are being bombed and crops and livestock are destroyed,”
  • The organization urged governments to stop conflicts from continuing to spawn “catastrophic hunger” and to ensure that relief agencies could operate in conflict zones and reach those in need.
  • It also called on donor countries to “immediately and fully” fund the U.N.’s efforts to alleviate hunger.

ABOUT OXFAM

  • Founded in 1942, Oxfam is a non-profit organisation
  • The Oxfam International Secretariat is based in Nairobi, Kenya
  • Oxfam is a vibrant global movement of dedicated people fighting poverty – together.
  • Oxfam fights poverty in three ways: Campaigning, Development and Emergency Response.
  • Campaigning for change: Poverty isn’t just about lack of resources. In a wealthy world it’s about bad decisions made by powerful people. Oxfam campaigns hard, putting pressure on leaders for real lasting change.
  • Development work: Poor people can take control, solve their own problems, and rely on themselves – with the right support. Fighting poverty, we fund long-term work worldwide.
  • Emergency response: People need help in an emergency – fast. We save lives, swiftly delivering aid, support and protection; and we help people prepare for future crises
  • Recently, the Inequality Virus Report and Global Inequality Crisis Report were released by Oxfam International.
  • The reports have found that the Covid pandemic deeply increased the existing inequalities in India and around the world.