New Delhi, March 12 -- While equities have been sliding since late 2024, gold has been on a tear. The run-up in gold prices means the union government faces a much higher liability on payouts in its sovereign gold bond (SGB) scheme, which was introduced in 2015 and raised funds in 67 tranches. SGBs have a tenure of eight years. They are issued and redeemed at the prevailing gold price and pay interest of 2.5-2.75% a year, which is taxed. But capital gains on redemption is tax-free.

Gold and equity prices had broadly been in sync since 2015. Until September 2024, equity prices, as measured by the Nifty 50 Total Share Index, had increased about 3.3 times since 2015. By comparison, gold delivered 3-fold returns. But in the past few months, ...