New Delhi: The recent Household Finance committee report by the Dr. Tarun Ramadorai submitted to the RBI recommends mandatory PAN submission for gold purchase above Rs 2 lakh. Considering the cultural preferences for gold as an investment option among Indian households, the report suggested several means to ensure more of the money stocked in gold is redirected to alternate dynamic forms of investment.
The author of the report, Dr. Ramadorai – a professor at the Imperial College, London, recommended that the gold bonds, already being issued by the RBI, must have an additional option of being redeemed not just in cash but also as gold, in an effort to increase its acceptability among traditional investors who prefer asset tangibility.
Another key recommendation is to introduce a variant of the existing gold bonds that will have exclusive matrilineal succession unless a woman leaves behind no female heirs.
GJF Reaction:
Reacting on this report, Chairman of All Indian Gems & Jewellery Trade Federation (GJF) Mr. Nitin Khandelwal said, “There are approx. 29 crore PAN card holders in India, which means only 18 to 20% of our population has PAN card. It is extremely difficult to understand why Economist are suggesting to make PAN Card mandatory for any transaction in Gold. It is quite saddening that time and again, the industry is targeted by various policy makers and experts, instead of nurturing and promoting it to become more organised and compliant. 70% of our industry generates business from the rural markets where people do not have PAN cards and also not fall under tax bracket due to agricultural income. These earnings are predominantly saved in Gold jewellery. Gold is the only commodity that helps people sail through financial crisis especially in rural areas during flood / draught or any other calamities, since it can be encashed anytime and anywhere.”
“If PAN cards are mandatory, official business will drop and certain jewellers promoting non billed cash sales will mushroom. The organised sector in the Gems & Jewellery Industry, which is growing by at least 5 to 7% every year since past 10 years will be directly impacted, as organised sector generates almost 75 to 80% of the business in the Gems & Jewellery Industry. Also, this industry is the second largest employment generator in the country. We have to safeguard the jobs, nurture and create opportunities for the future generations, instead of formulating any mandatory policy that could have a catastrophic effect. We are honoured to have a pro-business Government, that has supported our industry during Excise and GST. Unlike Western / European countries, India being diversified will take its own due course and time to become a cashless economy. Hence it is suggested to take calculative and considerable steps rather than drastic changes,” he added.
