From Bloomberg, by Swansy Afonso
- Customers not tempted by 16-month-old gold deposit program
- Plan was designed to curb India’s massive gold imports
It seems the only way to stop Indians from buying more gold is to take their money away.
Prime Minister Narendra Modi’s government spent 16 months trying to persuade Indians to deposit their jewelry in the bank to earn interest, in an effort to curb soaring imports of the precious metal. But the program has only lured a tiny fraction of the $900 billion of gold that families and temples are estimated to have stashed away. On the other hand, Modi’s controversial decision to withdraw all high-value banknotes did the job instead.
Coupled with a higher import tax, the abolition of 86 percent of the nation’s banknotes in an anti-corruption drive helped push gold imports down 39 percent last year to 558 metric tons. Overall consumption in India tumbled to 676 tons, the lowest since 2009, according to the World Gold Council.
That’s bought Modi some breathing space to persuade Indians to recycle their gold in a country where jewelry plays an important role in weddings and festivals and is handed down to daughters for their own weddings.
“We Indians don’t like to sell our gold,” said Samsher Aliyar, a 29-year-old Mumbai cab driver. “My grandmother’s generation and even my parents aren’t going to deposit their gold with the banks as they consider it a part of their children’s inheritance. In a worst case scenario, we would take a loan on it.”
Read more at Bloomberg…