Comments
Gold imports went up 64 per cent during April-September 2011. Should this trend continue, full-year imports will add up to $65 billion, way above the all-time high of $40 billion during 2010-11.
The average price of gold imports over this period was $1607 an ounce, up 31 per cent. But this large hike was not much of a dampener on demand. In quantity terms, imports rose 25 per cent to 554 tonnes.
A recent RBI report flags the insensitivity of demand for gold (and oil, for which some part of the inelasticity is due to subsidies) to price as a cause for concern. It is easy to see why. The way things are headed, we could, in a year of sluggish capital flows, end up with a current account deficit of $65 billion, as against the $55 billion projected by the Prime Minister's Economic Advisory Council last July.
Though the customs duty on gold was hiked recently, to 2 per cent, it is still practically zero. Whether and how much the fall of the rupee will moderate the growth in the demand for gold is not clear.
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.