IMPACT OF INDIA'S GOLD RUSH BY ROHITH BHANDARY

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India is known to be among the largest importer of gold in the world. The imports of gold by India have been raising unbeaten in recent years notwithstanding the sustained increase in gold prices. It is well known that demand for gold in India is influenced by many social, economic, and cultural factors. The price of gold, rural income distribution, quantum of black money, rate of return on alternative financial assets and general price level are factor for gold demand in India.

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IMPACT OF INDIA'S GOLD RUSH BY ROHITH BHANDARY

  1. 1. IMPACTS OF INDIA’S GOLD RUSH
  2. 2. • • • • • • • Contents INRODUCTION WHAT IS GOLD? VARIOUS USES OF GOLD IMPORTANCE OF GOLD IN INDIA WHY INCREASE IN DEMAND OF GOLD IN INDIA IMPORT OF GOLD IN INDIA IMPACTS OF GOLD IMPORTS ON VARIOUS FACTORS • STEPS TAKEN BY GOVERNMENT FOR REDUCING IMPORT • STEPS THAT SHOULD BE TAKEN BY GOVERNMENT TO REDUCE IMPORT • CONCLUSION
  3. 3. INTRODUCTION India is known to be among the largest importer of gold in the world. It is well known that demand for gold in India is influenced by many social, economic , and cultural factors. The price of gold , rural income distribution, quantum of black money rate, and general price level are factor for gold demand in India
  4. 4. What isISGold??? WHAT GOLD? Gold is a softy, shiny, and ductile metal and is a chemical element with the symbol ‘Au’ and atomic number 79. Pure gold has a bright yellow.
  5. 5. USES OF GOLD JEWELLERY FINANCIAL GOLD INDUSTRIAL USE
  6. 6. IMPORTANCE OF GOLD IN INDIA Importance of gold determining status: 1.Elite class 2.Middle class 3.Poor class
  7. 7. WHY INCREASE IN DEMAND OF GOLD IN INDIA?  Lack of alternative investment  Safe – haven option for investment  Easily pledged  Transactions are mainly on cash basis  Special events  Gain against hard currencies  Rural area people keep their money invested on gold  Easy to keep
  8. 8. IMPORT OF GOLD IN INDIA India imported around 162 tonnes of gold in May 2013 up from 142.5 tonnes in April 2013, recording a 138% increase in imports made in a year earlier .
  9. 9. TRENDS IN GOLD IMPORT IN INDIA YEAR IMPORT OF GOLD(Rs. C) GROWTH RATE (%) 1999-00 17991 ... 2000-01 18829 4.7 2001-02 19889 5.6 2002-03 18608 -6.4 2003-04 29946 60.9 2004-05 47348 58.1 2005-06 47951 1.3 2006-07 65440 36.5 2007-08 67330 2.9 2008-09 95324 41.6 2009-10 135878 42.5 2010-11 184742 36.0 2011-12 269563 45.9
  10. 10. IMPACTS OF GOLD IMPORTS ON VARIOUS FACTORS
  11. 11. WIDENS CURRENT ACCOUNT DEFICIT
  12. 12. AN UN-PRODUCTIVE INVESTMENT
  13. 13. INCREASES THE BLACK MONEY CERCULATION
  14. 14. DECREASES THE FOREX RESERVE
  15. 15. IMPACT ON SENSEX
  16. 16. IMPACT ON INTEREST RATES
  17. 17. IMPACT ON EXCHANGE RATES
  18. 18. IMPACT ON INFLATION
  19. 19. IMPACT ON DOLLAR
  20. 20. PRICE OF THE GOLD AFFECTS THE COUNTRIES THAT IMPORT AND EXPORT IT
  21. 21. STEPS TAKEN BY GOVERNMENT FOR REDUCING IMPORT • • • • • The Government has raised the import duty on gold to 10% from 8%. Banks have been instructed to stop lending against gold and also against offering loans to buy gold. The RBI said imports of gold against both suppliers credit and buyers credit would now have to toe the line of 100 percent cash margins. It also said imports of gold on an unfixed price basis also had to be on a 100 percent cash margin basis. Introduction of Gold ETFs to reduce the physical demand of gold. Any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellary.
  22. 22. STEPS THAT SHOULD BE TAKEN BY GOVERNMENT TO REDUCE IMPORT • By increasing various taxes on import and purchase of gold. • By offering inflation-protected bonds to damp demand for gold and offer a hedge against inflation. • The government could open deposits of gold at banks by customers. • Better documentation of gold sale and purchase. • Increase the reach of Banks. • Liquidity quotient of alternate investment instruments. • Massive education campaign must be launched to create awareness amongst the public. • Recycling of domestic gold. • Limits on the volume and value of gold to be imported by canalising agencies and nominated banks.
  23. 23. CONCLUSION

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