Gold demand spurts 45

MUMBAI, JAN 19: India has not only maintained its status as the world's largest market for gold, but has also become the fastest growing mar...

MUMBAI, JAN 19: India has not only maintained its status as the world8217;s largest market for gold, but has also become the fastest growing market. Demand for gold in India rose by 45 per cent to 737 tonnes in 1997 from 507.5 tonnes in 1996, according to the World Gold Council , the marketing arm of the gold mining industry.

8220;Among several factors that contributed to this phenomenal growth in demand in India, are liberalisation of gold imports due to the increase in the NRI baggage allowance and the permission given to licensed banks and chanellising agencies to import gold on open genral licence OGL,8221; said Khursheeda Mody, country manager, WGC. These moves had a substantial impact approximately 11 per cent on reducing the premiums between the international and domestic gold prices.

In 1996, 254.8 tonnes came in via the NRI route as against 520.5 tonnes in 1997. In this context the most significant trend has been the sharp increase in official imports which have gone up by 88 taking the tonnage from 279.8 tonnes in 1996 to 526.5 tonnes in 1997. With the dramatic increase in official imports, the government would have gained some 300 million in import duties on gold last year.

Gold consumption was higher in the fourth quarter of 1997, indicating that lower prices have led to a rise in demand. 8220;Gold prices in India had fallen significantly from around Rs 5,000 per 10 gm to Rs 4040 for standard mint gold in a year8217;s time in line with world prices. Gold has been available at a bargain price for the last few months and that has made it an excellent buy for Indians who see it as a safety net. India has also seen a rise in disposable incomes across the board and that has also helped in fuelling the demand for what Indians regard as a must-buy at any time,8221; said Rolf Schneebeli, regional CEO, Middle East and Indian sub-continent of WGC.

8220;At the gold economic conference in November 1996 and at the gold banking seminar in August 1997, the World Gold Council had strongly recommended that the liberalisation of gold would be beneficial to the industry, the consumer and above all the government,8221; he said. The council8217;s consumption trend analysis shows the highest growth in imports through the NRI route. The council emphasised that India, as the world8217;s largest consumer of gold, has not lost confidence in the investment function of gold. This confidence in gold is not only unique to Indians, but it has also been seen in the manifestation of this emotion in the South-east Asian countries, which experienced a crash in their financial markets recently. People who held gold were better protected than those who did not.