One of the worst droughts in the country and high prices, fuelled by an over six-week long strike by the bullion industry, acted in concert to drag down India’s gold consumption
Mumbai : Gold demand in India declined by 39 per cent during the first quarter of this year at 116.5 tonnes due to jewellers’ strike over re-introduction of excise duty that affected the wedding purchase segment, says a report.
According to the World Gold Council’s ‘Gold Demand Trends’ report, the total gold demand stood at 191.7 tonnes in the January-March quarter of 2015. In terms of value, the demand fell by 36 per cent to Rs 29,900 crore in the first quarter of 2016 from Rs 46,730 crore in the year-ago period, it said. Since January, gold prices have risen more than 20% to above Rs 30,000- per-10 gm level.
“In first quarter of 2016, gold demand in India was down 39 per cent to 116.5 tonnes compared to January-March period of 2015. The jewellers’ strike following the re-introduction of an excise duty, which left even wedding shoppers affected, was one major reason impacting demand,” WGC Managing Director, India Somasundaram PR told PTI.
The sharp increase in the price of gold since the beginning of the year and an expectation of a cut in the customs duty on gold also led consumers to hold back on purchases, he pointed out. A new regulation mandating PAN card details for purchases above Rs 2 lakh, is also reported to have affected buying, he said.
However, the worst may be over if the forecast of above-normal monsoon holds true, which would see the country consuming its “normal” quota of the yellow metal, says Somasundaram PR said.
“The forecast of India’s full year demand is in the range of 850-950 tonnes,” Somasundaram said. In 2015, Indians consumed about 848.9 tn of gold.
As 60-65% of India’s gold consumption comes from rural areas, two severe back-to-back droughts in most of Maharashtra and in some other parts of the country has had an adverse impact on gold purchases.
Total jewellery demand in the first quarter of this year was down 41 per cent at 88.4 tonnes, compared to 150.8 tonnes in the same period last year, the report said. In value terms, demand witnessed a fall of 38.2 per cent at Rs 22,702 crore from Rs 36,761 crore in the same quarter of 2015, it said. Total investment demand was down 31 per cent at 28 tonnes, compared to 40.9 tonnes in the year-ago period, it said.
In value terms, gold investment demand saw a drop of 27.8 per cent at Rs 7,198 crore from Rs 9,969 crore in the January-March quarter of 2015, it further said.
Somasundaram said the success of gold monetisation scheme launched by the central government in November should not be gauged by the amount of reduction in imports.
