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.

1. IMPACTS OF
INDIA’S GOLD RUSH

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. 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. 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. USES OF GOLD
JEWELLERY
FINANCIAL GOLD
INDUSTRIAL USE

6. IMPORTANCE OF GOLD IN INDIA
Importance of gold
determining status:
1.Elite class
2.Middle class
3.Poor class

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. 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. 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. IMPACTS OF GOLD IMPORTS ON
VARIOUS FACTORS

11. WIDENS CURRENT ACCOUNT DEFICIT

12. AN UN-PRODUCTIVE INVESTMENT

13. INCREASES THE BLACK MONEY
CERCULATION

14. DECREASES THE FOREX RESERVE

15. IMPACT ON SENSEX

16. IMPACT ON INTEREST RATES

17. IMPACT ON EXCHANGE RATES

18. IMPACT ON INFLATION

19. IMPACT ON DOLLAR

20. PRICE OF THE GOLD AFFECTS THE
COUNTRIES THAT IMPORT AND EXPORT IT

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. 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. CONCLUSION