61 gold bond tranches yet to be redeemed, current govt liability may climb to ₹1.12 lakh crore

 Budget 2025 has probably made the government’s discomfort with sovereign gold bonds (SGBs) explicit. It has not only pencilled in zero borrowings against the instrument, indicating it would not be using that route to raise debt from the public, but also knocked off the earlier ₹15,000 crore estimate for SGB borrowings in the 2024-25 fiscal (FY25). To date, there have been no SGB issuances in FY25, which makes the February 2024 tranche the most recent.

The focus has also shifted firmly to repayment of gold bonds already issued. The government expects to repay ₹8,040 crore through redemption of these bonds in FY25. This will be the highest SGB redemption number in any year so far. For FY26, it has lowered this forecast, pegging it at ₹5,510 crore.

As a result, the government’s accumulated liabilities against SGBs are also projected to come down significantly.

The July 2024 Budget projected government liabilities on gold bonds touching ₹85,000 crore by the end of this fiscal, almost nine times the number in FY20. However, the government has dropped this projection in the revised estimates of the Budget presented in February 2025.

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Instead, with no fresh issuance and only repayments on its plate, government liabilities against SGBs are now estimated at ₹60,565 crore in the current fiscal; this is projected to come down to ₹55,000 crore in the next fiscal. However, that is still over 5 times the FY20 number.

This is still a tall task for the government.

So far, the government has fully redeemed six tranches of the bonds; but still has 61 tranches to be redeemed, and the final redemption of the last tranche will take place only in February 2032.

RBI’s FY24 annual report states, “Since the inception of the SGB scheme in November 2015, a total of ₹72,274 crores (146.96 tonnes) has been raised through 67 tranches.” As of February 14, 2025, RBI data shows that Indian investors still hold bonds worth 132 tonnes of gold. These bonds are estimated to be worth around ₹1.12 lakh crore at current market prices.

Hence, the ₹55,000 crore in liabilities projected under SGBs for FY26 are conservative , as they do not reflect the prevailing price of gold at which the redemptions will finally occur. Between 2015 and July 2024, average gold prices had already risen 171%, and the precious metal has not slowed down since.

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