Comments
Gold jewellery demand plunged to a seven-year low of 514 tonnes (662 tonnes) in 2016 on the back of demonetisation and a series of government measures to curb gold sales, besides the jewellers downing shutters in protest against the excise duty levy.
The previous low of 676 tonnes in India was recorded in 2009, during the Lehman Brothers crisis in the US.
Overall demand, including that of investments, dipped 21 per cent last year to 676 tonnes (857 tonnes) as the highly unorganised jewellery industry is gearing up to usher in the new GST regime. In value terms, jewellery demand was down 12 per cent at ₹1.39 lakh crore (₹1.58 lakh crore), while that of investments were down 6 per cent at ₹43,647 crore (₹46,597 crore), according to the World Gold Council report released on Friday.
Gold demand was up three per cent at 244 tonnes (236 tonnes) in the December quarter, aided by strong festival buying. Jewellery sales were up 3.5 per cent at 182 tonnes (176 tonnes).
Gold recycling was down 35 per cent at 13 tonnes (20 tonnes) and in 2016 it was up 12 per cent at 90 tonnes (80 tonnes) as prices slipped.
Somasundaram PR, Managing Director, World Gold Council, said last year was the most challenging year not only for the industry but also for collecting data, with the government clampdown on black money leading to demonetisation of high-value currency and a prolonged strike by jewellers protesting against excise duty.
Gold smuggling in India has surged since import duty was raised gradually to 10 per cent in August 2013 in an effort to bridge the current account deficit gap. In 2016, smugglers brought in 100-120 tonnes gold in the country, Somasundaram said. Smuggling came to a halt immediately after the demonetisation but is reviving slowly. It cannot be wished away till the import duty is lowered to a realistic level, he said. In a bid to exchange now-obsolete currency notes, consumers rushed to buy gold, pushing up the gold price to ₹50,000 per 10 grams in the grey market against ₹31,000 per 10 grams.
Demand for gold jewellery from the cash-based rural economy plunged. However, Somasundaram said the impact is expected to be short-lived as demonetised currency is being replaced with new currencies and the income level of farmers is improving with the good monsoon.
Bullion imports dipped 39 per cent to 557 tonnes (914 tonnes).
Though the price of gold was down intermittently during the year, it registered an increase of 13 per cent to ₹27,013 (₹23,903) per 10 grams in 2016.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.