NEW DELHI —
As dawn breaks, thousands of devotees line up at Mumbai's Shree Siddhivinayak temple to pay homage to Ganesha, the elephant-headed Hindu God. At times, offerings for the deity include gold or silver coins, or sometimes even a piece of jewelry.
Each night the valuables are placed in a heavily-guarded strongroom, where the trove has built up for more than 200 years.
Narendra Rane, chairman of the trust for Siddhivinayak Temple, can only offer a rough estimate of what lies inside.
"We have about 200 to 225 kilograms of gold and more than 2,000 kilograms of silver in the room, but I couldn't give an exact figure," he says via translator.
But now the government may want him to. As part of efforts to monetize an estimated 22,000 tons of yellow metal lying around homes, bank lockers and vaults throughout the country, New Delhi officials are trying coax temples and households alike to deposit at least some of their massive reserves.
By offering interest on prospective deposits, government officials say the gold would be melted down to sate the country’s massive appetite for jewelry, helping the world’s biggest gold consumer cut expensive imports.
According to N.R. Bhanumurthy of New Delhi's National Institute of Public Finance and Policy, the scheme to monetize the country’s vast gold reserves was prompted by a massive trade deficit that sent the rupee plummeting in 2013.
“This is basically an outcome of the crisis we had on the external account for the past one-and-a-half years, where we have seen a surge in the gold imports, and it has put a pressure on current account balances," he said. "In that context, there were suggestions that we need to recycle the gold as a solution.”
A similar scheme offered some 15 years ago flopped, partly because of low interest rates; this time, however, the government wants public sector banks to offer improved rates along with tax incentives.
While temple chairmen such as Rane aren't averse to such a proposal, he says income generated by the vast reserves already subsidizes welfare projects, such as textbooks for students and medical aid for the sick.
"If we can earn more money on the gold we have, we will think positively about such a scheme," he said, explaining that he feels temple wealth belongs to the poor, and that temple trustees will account for views of devotees before making a decision.
Indeed, devotees have previously voiced objections to gold meant for the gods being melted or being used to earn interest. As devotees emerge from prayers at Siddhivinayak, some express a more pragmatic approach.
“I am all for it," said Rahul Sharma, an army officer. "It should be used for a good purpose, for the welfare of mankind I would say.”
“They should use it for poor people, for good people," said Mansi Joshi. "We have to think practically when it comes to India.”
Already, Siddhivinayak is making efforts to use some of its gold, auctioning portions to devotees four times annually. One auction in April generated more than $80,000.
Other temple trusts utilize similar strategies. One of India’s richest temples, Tirumala Tirupati Devasthamans in Andhra Pradesh state, converts some of its gold into coins, which are then sold to devotees. It has also deposited five tons of gold in a bank and takes interest in the form of gold.
But still, other trusts may be harder to convince. When the government announced the gold monetization scheme last month, some temple trusts in the southern Kerala state, such as the one representing Sree Padmanabhaswamy temple, appeared skeptical. Four years ago, the temple’s vaults were found to contain sacks of gold coins, diamonds and jewelry estimated at an astounding $20 billion.
The government also wants to persuade Indian households to deposit their gold with banks, and will allow people to bring in as little as 30 grams of gold to earn interest. The World Gold Council says gold held by households could exceed 19,000 tons.
But this may be difficult in a country where growing incomes have only intensified the passion for the yellow metal.
Ratna Dehadrai, whose son got married recently, is among millions of Indian women who would prefer that their jewelry stay within the family.
“It’s been handed over to us by our mothers and mothers in law, so it has a lot of emotional attachment to it, and we would like to pass it on to our children,” she said.
Economist Bhanumurthy says it may be easier to persuade temples to part with their gold, because while that lies idle, household gold is used by women.
“In my view [the government scheme] will only help to recycle only 10- to 15-percent of the gold in the country, because the surplus gold is only up to that level," he said. "Unfortunately in India, it is more of a consumption good than a capital asset. See, it is being used on a regular basis, you don’t see women go out without a gold chain.”
It remains to be seen whether the government can persuade citizens and temple trustees alike to see their approximately $1 trillion reserves as a financial asset that can generate money rather than a sacred trove of riches intended to sit idle in vaults and lockers.