PMEAC Advises To Make Mutual Funds, Life Insurance More Attractive

The Economic Advisory Council to the Prime Minister of India (PMEAC), on Thursday 23rd February, recommended government to make life insurance and mutual fund schemes more attractive to limit Indian investors’ appetite for gold. The Advisory Council said that, these financial products should be made at least as attractive as was the case till the year 2010.

According to the sources in PMEAC, the new products like life insurance and mutual funds can offer low-cost investment avenues with greater transparency. Besides, these products also open new ways for financial firms. The import of gold forms a large component in overall country’s imports. So, in order to limit the appetite for gold, the council suggested to work more on making other kinds of assets more attractive. The official from PMEAC, said that, fiscal incentives for mutual funds and life insurance products is also needed.

The Senior Partner of McKinsey India, said that, a mere 5 percent shift in annual flows would be worth Rs.55,000 Rs.60,000 crores in the coming five years. He mentioned that banks in Japan and China offer recurring deposit saving products with every month contribution being used to buy gold at prevailing prices. Thus, Indian financial products should be made more attractive, offering simple and liquid returns similar to investment in physical gold.

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