The Hindu Business Line : Value of gold

This refers to the article “ (Business Line, February 8) and the suggestion to hike the import duty on gold by Rs 100 per 10 gm. The contention that gold has little practical utility is arguable. In India, possession of gold is not an obsession but has sentimental value. Even the poorest of the poor will have some gold jewellery, particularly in the villages, as it helps meet monetary requirements, especially during emergencies. This is especially true in the case of agriculturalists and small traders.

Ninety per cent of the imported gold is turned into jewellery and the jewellery business is one of the largest employers of manpower as skilled workmen (goldsmiths), employees of nearly half a million big and small retail jewellers, are spread throughout the country. The exchequer is earning thousands of crores by direct and indirect taxes on jewellery sales.

The point that an increase of Rs 100 per 10 gm in import duty will not matter much to the public may be true, but a difference of Rs 10,000 per kg will certainly encourage smuggling, which has been curbed to a great extent since liberalisation of gold import through banks, etc.,

Also, gem and jewellery exports are increasing each year, earning billions of dollars in foreign exchange, opening up new markets and making a mark even when competing with established European manufacturers.

As for speculation, since restoration of forward market trading, not only gold but other commodities are also being traded. It may be gambling but not direct gambling, and gold trading is not much.

A sum of Rs 800 crore as additional duty will not make much difference in the overall budgetary revenues. Instead, the Government should rather reduce the wastage in its expenditure, and find solutions quickly to curb political and other agitations that only create law and order problems and eat away plenty of money that can otherwise be put to productive use.

N. Anantha Padmanabhan Chairman Gold Club of Chennai

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