Gold Rush

Gold and gold ornaments are symbols of status and security for India’s increasingly affluent population. Whenever prices go down, as in June 2013, Indians seize it as a chance to buy gold and ornaments, as an investment. Indians have relentless appetite for gold jewellery. But during the ‘socialist era’, private citizens could not own gold bars or coins, and imports were banned. New Delhi allowed legal gold imports from the early 1990s. With liberalisation gold imports increased 80% between 2002 and 2011, when they peaked at 969 tons, before weakening slightly to 860 tons in 2012. During 2011-12, gold accounted for 11.5% of total imports in value terms, in comparison to 7% in 2008-09. India’s currency has tumbled from Rs 60 to the dollar, to a record low of Rs 60.70 in July 2013. India’s Finance Minister, Mr P Chidambaram has appealed to Indians to stop buying gold, to help the currency and the economy. An outright import ban has been ruled out. Gold imports in April and May rose to about 300 tons, about a third of the total in 2012. Since January 2012, New Delhi has raised import taxes on the precious metal four times, increasing it from 2% to 8%. The Reserve Bank of India has banned banks from providing credit for jewellery stores. Purchase and import of gold can be done only on a cash basis, except for export oriented jewellery making. The measures are hurting large gold retail chains, and there are fears of gold smuggling.

With depreciation of rupee goes unabated despite Reserve Bank’s intervention to stabilise the situation, reckless import of gold seems to have added an extra dimension to the crisis. Gold is intricately related to the evil practice of dowry. Despite periodic noises over dowry deaths, nothing has changed for the better over the years. While women’s groups battle it mainly in urban India, poor parents know how difficult it is to clinch a marriage deal without gold even in educated families. As some top business houses like the TATAs are coming in a big way in jewellery business, attraction for gold ornaments is getting new boost among middle class families, not to speak of poor families who continue to see security in gold ornaments for bad times. Almost daily their models and super-models walk the ramps to create a craze for gold ornaments which sometimes becomes fatal.

Gold is an integral part of social custom, irrespective of religion and caste. What is needed is social reforms movement but the government of the day thinks only in terms of ‘economic reforms’ which will encourage import of more gold and more crises as well.

Vol. 46, No. 6, Aug 18-24, 2013

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