Module: General Practice
Q31: Consider the following regarding the Sovereign Gold Bond (SGB) Scheme in 2026-27:
Assertion (A): The government has decided to discontinue the issuance of new tranches of Sovereign Gold Bonds (SGB) in FY 2026-27.
Reason (R): The import duty on Gold was significantly reduced to 6% in previous budgets, reducing the arbitrage appeal and high cost of servicing the 2.5% interest on SGBs.
Reason (R): The import duty on Gold was significantly reduced to 6% in previous budgets, reducing the arbitrage appeal and high cost of servicing the 2.5% interest on SGBs.
✅ Correct Answer: A
The Assertion is True: The Union Budget 2026-27 indicated a pause/discontinuation of new SGB issuances.
The Reason is True: The reduction in Gold Import Duty to ~6% made domestic prices correct, making SGBs (with 2.5% interest + market link) an expensive borrowing tool for the government compared to G-Secs.
The Reason is True: The reduction in Gold Import Duty to ~6% made domestic prices correct, making SGBs (with 2.5% interest + market link) an expensive borrowing tool for the government compared to G-Secs.