New Delhi: Gold demand in India for 2015 saw a marginal increase to 849 tons from 828 tons in 2014. The demand in Q4 of 2015 grew by 6% to 233 tons up from 220 tons during the same period last year, according to a report published by the World Gold Council (WGC). Demand in the country has once again proven resilient in the face of a range of challenges, underlining the role of gold as an essential component of households’ savings and reinforcing the need to bring gold into the financial infrastructure.
The above report has been widely published in global publications, so we are not going to touch all of its aspects here. But we had an interesting interaction with Mr. Somasundaram PR, Managing Director of the WGC about India’s Ashok Chakra gold coins and its impact on Indian economy.
In the later part of 2015, when the Ashok Chakra gold coins in denominations of 5, 10 and 20 grams with 999 purity were introduced, India’s bullion and jewellery industry leaders expressed anguish over the government move. They said that while on one hand the government is trying to extract gold lying idle in households and temple-trusts, on the other it is promoting and encouraging sales of gold bars and coins. This will again lead to a greater amount of hoarding by India people, they argued.
Mr. Somasundaram says, “India has to import about 60 tons of gold coins annually to meet the demand which are sold at a premium of 8-10%. Earlier, coins and bars were available in Indian markets but they could not compete with the imported ones as they were not temper-proof and also had a lesser purity mark. Now the Indian government has offered a competent option in form of Ashok Chakra gold coins which are temper-proof and has a 999 purity mark. So now India will not be importing coins and bars. As a result, the move may help revive investment demand in India.”
“Besides, the Indian Coin is part of Indian Gold monetization Scheme (GMS). The coin is the first ever national gold coin carrying the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other side. Besides denominations of 5 and 10 grams, 20 grams bar will also be available. The Indian Gold Coin is unique in many respects and carries advanced anti-counterfeit features and tamper-proof packaging that will aid easy recycling,” he adds.
The initiative is a great idea of putting India on the international map of coin collectors. It was long due and would require having many more additions to this edition. The move is also part of a broader government strategy announced in the Budget for 2015-16 to increase investment options for people and also to bring down imports of gold to contain their damaging impact on trade balance. Announcing the proposal, India’s Finance Minister Mr. Arun Jaitley had said, “The Indian Gold Coin would help reduce the demand for coins minted outside India and also help to recycle the gold available in the country.”
The introduction along with the gold monetization scheme would give enhanced impetus to organized recycling of gold in India, which in turn would help to boost the Indian economy further. The Indian Gold Coin and the Indian Gold Bullion align with the ‘Make in India’ initiative of the Government.
Mr. Somasundaram PR further says, “Refining is taking Centre stage and it is time for the industry to look holistically and seek policy support to improve the infrastructure for gold, ensuring transparency and quality, both fundamental to making the gold schemes a success.”
“The bold approach exemplified by launching the gold schemes towards the end of 2015 should be carried through with a singular focus on making gold fungible for the average household through banking system. The economy will benefit significantly by enabling gold to be part of the formal financial system. In 2016, we anticipate that gold demand will be robust,” he added.
Posted by Suresh Chotai
