Up to $1 trillion in gold is held by temples in India. Now Modi wants them to monetize this vast hidden wealth – by Rama Lakshmi (Washington Post/National Post – April 24, 2015)

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MUMBAI — Workers for the centuries-old Shree Siddhivinayak Temple here spent hours unpacking gold coins, heavy wedding necklaces and lustrous pendants from a closely guarded “strong room.” By the time gold-buyers began mingling with worshippers at the sweltering sanctuary on Tuesday, the jewelry auctioneers were ready.

“This is not a regular gold coin that you would buy from a gold shop — it contains the Lord’s blessing,” a temple board member said, holding up a tiny coin, probably left by a devotee years ago. It eventually sold for four times its face value.

Wealthy Hindu temples such as this one are repositories for much of the $1 trillion US worth of privately held gold in India — about 22,000 tons, according to an estimate from the World Gold Council. In 2011, one temple in south India was found to have more than $22 billion in gold hidden away in locked rooms rumoured to be filled with snakes. Another has enough gold to rival the riches stashed at the Vatican, experts said.

But little of it is contributing to the Indian economy, and now Prime Minister Narendra Modi’s government is looking to monetize India’s vast hidden wealth. In coming weeks, the government plans to begin a program that will allow temples to deposit their gold into banks to earn interest and circulate in the economy, rather than sit idle in musty vaults. The gold, officials said, would be melted down and sold to jewellers.

India is one of the largest consumers of gold in the world, importing almost 1,000 tons each year. The nation’s leaders have tried in vain to curb the nation’s insatiable appetite. But now the government hopes to coax temples into parting with some of their gold to address the country’s trade imbalance and protect its foreign exchange reserves.

Most of this temple gold is neither traded nor monetized, Finance Minister Arun Jaitley said in a budget speech in February. By contrast, the Indian government’s gold reserves amount to only about 550 tons.

“Our hunger for gold had led to a severe current account deficit a couple of years ago because gold was the number two imported item after oil,” said Gnanasekar Thiagarajan, director of Mumbai-based commodities consultancy Commtrendz.

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