Gold is traditionally been extremely popular with Indians. Almost every household posses Gold and it is also part of important events like marriages, religious ceremonies etc. It is also an important asset, used as a currency and commodity. Significantly, Gold is often bought to counter the effects of inflation and currency fluctuations. Portfolio containing gold is generally regarded as most robust and less volatile than those that do not. On the whole, gold is significantly less volatile than most commodities and many equity indices.
The financial instrument which could catch the movements of gold and give its equivalent return to the investors will be proven good for India. This will help to control the current account deficit of the country as more demand of Gold pushed the import of gold and this increases the Current Account Deficit of the country.
RBI, Reserve bank of India is trying to reduce the demand of Gold for those who buy it to counter the effects of inflation and planning to sell Financial Instrument in place of Gold.