₹12,06,92,00,00,000 – what Indian government owes on sovereign gold bonds

₹12,06,92,00,00,000. That’s a little over ₹1.2 trillion rupees – or ₹1.2 lakh crores. This is the amount of money the government would have to shell out if it were to redeem all outstanding sovereign gold bonds (SGBs) today (April 1, 2025), at the prevailing gold price of ₹9,284/gram.In a written reply to parliament, the government said that “the outstanding value as on 20th March, 2025 on issue price is ₹67,322 crore for 130 tons of gold.” That means that in absolute terms, the government’s liability has ballooned 79% from its original debt burden taken on when it issued these outstanding bonds. This also does not include the money it has had to pay as interest on these bonds.Remember, the government has already fully redeemed bonds issued through 7 tranches and recently offered to prematurely redeem the eighth tranche. SGBs are redeemed based on prevalent gold prices, with the exact redemption prices being arrived at using the simple average of closing gold price for the week preceding redemption.This liability number is almost certainly going to balloon much more, since the last tranche of bonds will be fully redeemed only in 2032 and gold prices are showing no signs of slowing down. Since 2015, when the first tranche of SGBs was issued, gold prices have jumped over 252%.As it is, every ₹1 rise in the price of gold will add ₹13 crores to the total redemption figure, basis the 130 tonnes of gold outstanding.
Also Read: This expert believes gold prices will keep rising with no upper limitThe government has had to face quite a steep financial outflow since these bonds were first issued. The first tranche, for instance, had to be redeemed at a 128% premium; add in the interest paid on this tranche, the government ended up paying 148% more than what it originally raised. Similarly, the subsequent tranches: Tranche-2 saw the government paying back 162% including interest, Tranche-3 earned investors a total return of 146% if held to maturity, and Tranche-4 earned SGB investors 142% returns over 8 years.This cost was proving to be so high that the government stopped issuing new tranches after February 2024. Finance Minister Nirmala Sitharaman in her post-Budget briefing in February 2025 responded to a question on whether SGBs were being discontinued with, “Yes, in a way.”As the written response to Parliament reiterates, “Due to the recent gold price volatility and global economic headwinds, this form of borrowings have [sic] become relatively expensive. Therefore, based on maturing and deepening of Indian G-Sec market, which helped in mobilising relative low cost borrowing, resources were not raised through SGBs in FY2024-25.”The response goes on to say that the government has been working to hedge against this rising liability. “The government has maintained a Gold Reserve Fund (GRF) in Public Account where price and interest differential amount is credited in time,” it says, but offers no other specifics on this front.Sovereign Gold Bonds were launched in 2015 as a way to raise cheap resources to fund fiscal deficit and reduce India’s dependence on gold imports, thereby reducing Current Account Deficit. In all, bonds equivalent to nearly 147 tonnes of gold (one SGB is denominated to one gram of gold) were issued, raising a total of ₹72.27 lakh crores over 9 financial years. Bonds worth less that 17 tonnes of gold have been fully redeemed, as of March 20, 2025.

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