Claims of the mineral’s deposit in Sonbhadra, UP, show us why we must not jump the gun or celebrate

Uttar Pradesh’s Sonbhadra district recently “struck gold” with the district mining officer KK Rai claiming that his team found deposits amounting to 3,000 tonnes. However, the euphoria around the “find” faded soon enough after the Geological Survey of India (GSI) stepped in to clarify that the estimated reserve was actually a paltry 160 kg. Though the GSI’s announcement was a disappointment for the country, it proved to be an even bigger blow to those who started celebrating and taking credit for the “big find.” It also was a lesson in circumspection for media houses, which pounced on the news the second the claims were made and did not bother to verify them. Consequently, quite a few of them were left red-faced when the GSI stepped in to clarify the truth. Had the news been true, the deposits would have been almost five times India’s current gold reserves of 626 tonnes and would have been worth an estimated Rs 12 lakh crore. It would be a lifeline for a cash-strapped Government.

The addition of 3,000 tonnes to the country’s gold reserves would have made us the nation with the world’s second largest stock after the US, which has the biggest gold stockpile in the world at 8,133 tonnes, upstaging Germany with 3,366 tonnes. A real discovery would have bolstered the economy of Sonbhadra district, encouraging mining and allied activities, which could have generated jobs. The find would have also cut imports significantly over the next five years, leading to immense foreign exchange savings, because despite India’s gold imports falling in 2019 to 646 tonnes, it still remains the largest importer of the yellow metal after China and imports 800-900 tonnes annually. Apart from that, had the quality of the gold been good enough, it could have been used as instant collateral for long-term loans from the International Monetary Fund (IMF), like it was done during the economic crisis of 1991. The only way to save the economy and Government from defaulting on the balance of payments at that time was to secure a loan of $2.2 billion from the IMF. India had then pledged 67 tonnes of its bullion. This helped the country raise $600 million (more than Rs 4,000 crore today) and by 1992-93 the economy started to improve. After 18 years, the Indian Government got back 200 tonnes of the yellow metal (almost three times of what was pawned) from the IMF. This ultimately led to our economy to be the force to be reckoned with it is today.