Mumbai: India’s gold demand has slumped to its lowest in 13 years due to various measures announced by the government to discourage purchases.

GFMS, a precious metals consultancy, estimated India’s gold demand at 580 tonnes in 2016, a decline of 34 per cent from the previous year. This level of demand has not been seen in India since 2003.

“The year 2016 will be remembered for pushing through radical changes in policies which potentially could change the dynamics of the Indian gold and jewellery industry,” the survey said.

The World Gold Council (WGC), however, maintains gold demand in India in 2016 at 650-750 tonnes. The WGC will release its final gold demand figure early next month.

The GFMS survey estimates India’s gold imports at 498 tonnes in 2016, also a level not seen since 2003. “India’s average monthly gold import demand for domestic consumption was approximately 60 tonnes in 2015. However, last year during February-September average monthly imports stood at just 13 tonnes as compared to a monthly average of 58 tonnes in the October-December quarter of 2016,” the GFMS survey noted.

“There are some interesting short-run dynamics too. Gold demand is spurred by inflation, rises with a good monsoon, and is dampened by higher import taxes and other restrictive measures. By 2020, we expect Indian gold demand to average 850-950 tonnes,” said Somasundaram PR, managing director, World Gold Council (India).