India’s gold monetisation scheme is not working. This article from Menger centre compares the scheme to Roosevelt’s 1933 scheme. Not sure whether one can compare as Roosevelt reads like a more compulsory type whereas India’s is optional and upto the public.
But the broad idea of govt wanting to amass gold from public still can be compared.
Remember the golden rule: He who has the gold makes the rules. Governments throughout history have tried to monopolize the issuance of money, accumulating hoards of gold and silver to spend on their adventures, often by forcing debased coinage on the populace. Even though gold doesn’t play quite the monetary role that it used to, private ownership of gold is still a hedge against government devaluation of currency units. The more gold in the hands of private individuals, the less devaluation the government can get away with before people stop using government money and return to gold.
India, as one of the world’s largest consumers of gold, has a long and special relationship with the metal. In particular, Hindu shrines in India hold large amounts of the metal, brought to them by Hindu pilgrims making offerings to the gods. One temple in particular, the Sri Padmanabhaswamy temple, holds an estimated 3,000 tonnes of gold, more than all other gold-holders except for the United States and German governments. Naturally, the Indian government would like to get its hands on that gold.
The Indian government has used a plethora of arguments to justify its desire to possess this gold. It has invoked the typical bogeyman of money laundering. It has tried to paint gold stores as non-productive assets. It has stated that acquiring this gold would help the government reduce its current account deficit. But the real reason is that all this gold in private hands undermines the government’s attempt at monopolizing the monetary system. India has constantly engaged in easy monetary policy, weakening the rupee and driving up prices. In response, Indians continue to hold gold and to import more in order to use it as a store of wealth and a hedge against inflation. Gold imports rose to such levels that the government decided to levy a 10% tariff on gold imports in an attempt to stifle gold demand.
Nice bit of history here. Truly those who have the gold makes the rules..