India issues domestic bonds denominated in gold

The government of India began issuing bonds denominated in grams of gold in November. They are currently purchasable at post offices in denominations of 1 gram to 500 grams at the equivalent of $1194.39/oz. (2600 rupees/gram at an exchange rate of 67.7 rupees/dollar). 8-year maturity and putable at par (x grams of gold) from year 5. 2.75% coupon in rupees.

Why is India doing this? They want to reduce the current account deficit attributable to gold imports. (Also, the 2.75% coupon is lower than the government's domestic borrowing cost of 7.5%.) Consumer demand accounts for about 1000 tons of gold imports a year. So far Indian consumers have bought only 1 ton worth of bonds. This is disappointing to the government but understandable. Consumers would rather pay the 30% premium for buying coins and jewelry than trust the government to hand over the promised gold in eight years. Greater demand is likely to develop over time, however, as investors are lulled into the belief that the government will deliver the promised gold at maturity.

Will such bonds be issued in other emerging countries? It makes in terms of availability of financing at a lower cost.