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Indians bought gold worth Rs 3.40 lakh crore in 2021

The government had cut customs duty on gold and silver to 7.5 per cent from 12.5 per cent in the Union Budget for 2021-22, enabling people to import more gold into the country through official channels.

Gold, Covid-19, Gold sale, Covid curbs, India news, Indian express, Indian express news, current affairsWith the easing of lockdown restrictions in the second half of the year and a successful progress of the vaccination programme, economic growth altered consumer sentiment significantly, triggering spending and investments across the board during Dussehra and Dhanteras. (Representational)

Despite the Covid pandemic and the overall slowdown in the economy, gold demand in India surged to 797.3 tonnes valued at Rs 340,860 crore during the calendar year 2021 indicating that consumers are still pinning their faith in the yellow metal. This is an 81 per cent rise in value terms when compared to demand for 446.4 tonnes of gold worth Rs 188,280 crore in the previous year, according to World Gold Council data.

The government had cut customs duty on gold and silver to 7.5 per cent from 12.5 per cent in the Union Budget for 2021-22, enabling people to import more gold into the country through official channels. India, which depends on imports for its requirements, imported 924.6 tonnes in 2021 – valued at Rs 4.28 lakh crore — as compared to 349.5 tonnes in 2020, an increase of 165 per cent, a major drain on the country’s foreign exchange reserves. Of the total gold purchased during the year, 610.9 tonnes of gold valued at Rs 261,140 crore were accounted by jewellery demand, a rise of 96 per cent in value terms. However, investment demand showed only 45 per cent rise to 186.5 tonnes valued at Rs 79,720 crore.

With the easing of lockdown restrictions in the second half of the year and a successful progress of the vaccination programme, economic growth altered consumer sentiment significantly, triggering spending and investments across the board during Dussehra and Dhanteras. This marked a remarkable recovery with many retailers reporting record sales volumes above even those of pre-pandemic levels and imports and exports rising in tandem. With more weddings yet muted celebrations, higher savings and pent-up demand boosted jewellery market.

Anecdotally, many manufacturers reported stretched capacities and unusual waiting times, pointing to the robustness of recovery, World Gold Council said. For 2022, Covid-19 and its future variants will remain a factor to watch as will price movements in gold, given global concerns on inflation, interest rate and geo-political developments.

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“The spurt in demand that is, in part, a result of pent-up demand in Q4 is less likely to be repeated this year, though the revival will continue to set a new normal above pre-pandemic levels. The next few years starting with 2022 will be years to watch for the effect of policy reforms, technology and industry collaboration to let gold evolve into a more transparent mainstream asset class,” said Somasundaram PR, Regional CEO, WGC.

Amid concerns over elevated equity valuations, the downward correction in the BSE Sensex index during Q4, which dropped 10 per cent between mid-October and mid-December – encouraged investors to focus on gold’ss safe haven investment attributes.

Gold loans are also rising along with the demand. Total gold loan outstanding of commercial banks rose 42 per cent to Rs 65,630 crore as of November 2021 as against Rs 46,221 crore a year ago, according to the RBI data.

First published on: 31-01-2022 at 03:00 IST
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