With half the country's population under 25, there could be at least 15 million marriages a year in the next decade.
Global gold producers see in this as an opportunity, as the precious metal forms a key part of all wedding ceremonies. This is despite gold prices surging over Rs 22,000 per 10 gram.
“This will drive approximately 500 tonnes of new gold demand a year,” says the World Gold Council in its Strategic Outlook “India: Heart of Gold”. This is in addition to the nearly 800 tonnes that Indians have been buying every year. The demand value is Rs 1 lakh crore at the current price of gold and the dollar exchange rate. The demand is apart from another 500 tonnes of gold that will be gifted by one family to another. “This transfer of ownership is not recaptured in recycling,” says the Council.
In 2010, gold jewellery demand increased 69 per cent to 746 tonnes over 2009. The per capita demand increased to 0.61 gm last year from 0.31 gm in 1992.
Though 75 per cent of the gold demand in the country is in the form of jewellery, over 50 per cent of the buying is motivated by investment-related principles. The rural sector, making up 70 per cent of the population, accounts for more than two-third of gold demand. WGC sees higher gold demand expecting the agriculture sector to grow at 5 per cent a year. “As a consequence, jewellery buying in rural communities is expected to grow faster,” it says.
Statistically, Indian homes hold the largest stock of gold in the world with 18,000 tonnes. At least seven per cent of the country's $256-billion household savings is held in gold.
The Council expects this to grow over the next decade, though demand driven by wedding is likely to continue.
According to the World Gold Council, between 1991 and 2010, gold price in rupee terms has increased 11 per cent annually, while population has risen 2 per cent every year.