Comments
The World Gold Council (WGC) sees gold becoming a strong ‘financial asset’ in India once the Centre rolls out its proposed comprehensive gold policy this year, a top official said.
According to the new policy, banks will be allowed to do ‘Bullion Banking’ (take risk in bullion) and new infrastructure such as spot exchanges would be a reality, ushering in transparency and thereby benefiting consumers and small jewellers in particular, PR Somasundaram, Managing Director-India, WGC, told BusinessLine here.
Bullion banking will enable consumers to do bullion-related transactions with banks with ease. Spot exchange will solve for liquidity in the market.
“This upcoming gold policy, which we expect to get unveiled by the government very soon, will have positive impact on our exports. It will not have any immediate impact on demand, but will improve sentiment,” said Somasundaram.
It may be recalled that a draft policy for promotion of gold as a financial asset has already been circulated to relevant Ministries for comments, and a proposal to set up a gold exchange is under consideration by the government.
“Our belief is that after the NITI Aayog report, the work for new comprehensive gold policy is in the last lap. It should be a reality very soon,” Somasundaram said.
Somasundaram also highlighted that the upcoming gold policy is not just driven by India’s needs. “We are looking at a policy not just for Indian market. We are looking at a policy for an international gold market with 25 per cent of demand coming from India,” he said.
Demand outlook
Meanwhile, the WGC has upped its gold consumption forecast for the Indian market for calendar year 2019 to 750-850 tonnes from the 700-800 tonnes projected earlier. This demand forecast is also higher than last year’s average demand of about 760.4 tonnes. India’s gold demand has averaged about 838 tonnes in the last decade.
“We see consumption will be slightly up at 750-850 tonnes this year than earlier anticipated. This is because GST is in a sense largely settled, market share of organised players are going up, and the government has taken initiatives to improve economy in rural areas, which will lead to higher savings in gold — more money in hands of rural people,” he said.
Annual Gold demand gained 4 per cent in 2018, on highest central bank buying in 50 years. Gold demand had reached 4,345 tonnes, up from 4,160 tonnes in 2017 and in line with the five-year average of 4,347.5 tonnes. A multi-decade high in central bank buying (651.5 tonnes) drove growth.
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.