UPSC Mains 2015 GS3 Q7 — Gold Monetization

• The causal link between gold consumption and the Current Account Deficit (CAD).
• The shift from gold as a 'dead asset' to a productive financial tool.
• Critical analysis of the merits (benefits) of the Gold Monetization Scheme for both the holder and the national economy.
• Briefly identify why the scheme faces implementation challenges despite its merits.

• Spending too much time on the history of gold culture in India instead of focusing on the economic impacts and the scheme itself.
• Failing to explain the mechanism of how gold imports specifically lead to the depreciation of the rupee.
• Providing a generic description of the scheme without strictly 'examining' its merits in the context of BoP and currency stability.
• Omitting the mention of how the scheme reduces the need for fresh imports by recycling existing domestic gold.

Devote approximately 40-50 words to establishing the problem (Gold Imports vs. CAD/Rupee value). Spend the bulk (110-120 words) examining the specific merits of the GMS across three levels: the individual, the banking system, and the sovereign economy. Reserve the final 30-40 words for a conclusion that suggests improvements for better scheme uptake.