Now I finally understood why It happened. Indian gov thought they can simply take the loan from Indian public on 2.5% interest since the price of Gold is usually stable and doesn't rise much.
The problem started when Gold has started rising sharply in Last 5-6 year, Since the Gov actually doesn't have equal amount of gold which they can sell and payback the Bond holders. Now they have to payback from their pocket.
Their plan to get literally free money has failed and now they have to pay 2.5%(Interest) + almost 150% appreciation to the SGBs bond holders.
All of you must be aware that SGBs are actually not backed by Real Gold,Its just a promise by Gov to Honour those bonds.
The problem started when Gold has started rising sharply in Last 5-6 year, Since the Gov actually doesn't have equal amount of gold which they can sell and payback the Bond holders. Now they have to payback from their pocket.
Their plan to get literally free money has failed and now they have to pay 2.5%(Interest) + almost 150% appreciation to the SGBs bond holders.
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