New Delhi: Due to a sharp rise in gold prices, over 35% in this financial year, the Union government’s outstanding debt on sovereign gold bonds (SGBs) have surged to a record Rs 1.5 lakh crore, The Financial Express reported.

With this, the current total outstanding SGB is 126 tonnes and at current rate, the price of gold is Rs 1,241 crore per tonne. 

According to the report, since the government is paying 2.5% interest (on the purchase year’s price) every year, at current prices of gold, the government’s debt has increased by approximately 200%.

As of the Union Budget 2025, the Union government has discontinued sovereign gold bonds, citing the high cost of borrowing associated with the instrument.

The last SGB issuance was in February 2024 at the gold price of Rs 6,263 per gram. From that level, prices have nearly doubled to over Rs 12,000.

As per the latest data on outstanding SGB liability of the government provided by the Reserve Bank of India (RBI), despite the rising prices, there has also been a slight redemption.

As per the Reserve Bank of India website, SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash, and the bonds are redeemed in cash on maturity. They are generally considered a safe and valuable investment option not only for individual investors, but also for HUFs, trusts and universities.

Meanwhile, gold exchange-traded funds (ETFs) – also known as paper gold – have seen a sharp rise in demand with the rising prices of gold.

A line in this article about SGBs has been altered for clarity.

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