‘Gold intoxication’ is prevalent only in India, said KC Chakrabarty, Deputy Governor, Reserve Bank of India (RBI).
Speaking at the Indian Institute of Management Bangalore (IIMB)-hosted panel discussion on ‘Gold and India’, Chakrabarty said the society as a whole must work together to change this mindset.
“Stop giving/taking gold as dowry and stop giving gold to temples,” he advised.
“Gold was an asset 2,000 years back, when India was rich and contributing 30 per cent to world GDP. Our Current Account Deficit (CAD) is negative and how can we invest in importing gold? India cannot afford it.”
Maintaining that RBI has never stopped import of gold, he said: “Do not borrow money from banks to import gold. Consumer has never benefitted from gold and gold has given a negative return world-wide, it is not an investment but a speculation.”
Dr Charan Singh, RBI Chair Professor, IIM-Bangalore, initiating the discussion said that majority of the gold buyers are from rural regions which indicates the spending capacity of the rural people.
Participating in the discussion, Amresh Acharya, Director-Investment, World Gold Council, said, “We believe that gold can be part of the solution to the challenges that India faces today and would like to see discussions about how best efficiency of the market can be enhanced by the standardisation of gold.”
Further there lies a strong need to consider the introduction of new gold-backed financial products to unlock the hidden economic value of the gold in the economy.
Implementation of recommendations such as the formation of a ‘Bullion Corporation of India’ and relaxation of regulatory curbs is the need of the hour, he added.
“Gold can play a role in financial inclusion and we should consider schemes of institutional credit against gold as collateral. There are significant holdings of gold at the grass root level which can be brought into the financial system,” added Acharya.