New Delhi, March 24 -- Sovereign Gold Bonds (SGBs) were introduced nine years ago. These were launched to give investors an opportunity to invest in the much-loved yellow metal in dematerialized form. It would be liquid and safe, could be mortgaged or traded, and exempt from capital gains tax at maturity.

Investors benefit both from rising gold prices as well as currency depreciation. The intent of the scheme was to wean away Indians from their seemingly insatiable appetite for physical gold.

India has consistently been among the world's top importers of gold. Recently, the average annual drain on foreign exchange due to these imports has been upwards of $40 billion. That is eight times the average annual imports of military hardware. O...