Salient to Investors:
Bachhraj Bamalwa at All India Gems & Jewellery Trade Federation said Indian households and temples hold 25,000 metric tons of gold – 10 percent would ensure supplies to Indian jewelers for 3 years. Bamalwa said Indians will continue spending on gold on marriages and in festivals, and with no social security, investment in gold is like a social security.
India’s record current-account deficit, is mainly due to its gold and oil imports – gold imports for 80 percent. India’s official gold stockpiles are 557.7 tons versus world reserves of 31,491 tons.
Kishore Narne at Motilal Oswal Commodity Broker said the only way India can reduce its dependence on imports is to tap the gold lying with individuals and temples, since the appetite for gold is never going to diminish. Madan Sabnavis at Credit Analysis & Research said the only way to reduce gold imports is to increase the import tariff and hope.
Nilesh Shah at Axis Bank said lower gold imports would result in a stronger rupee, lower interest rates, higher liquidity, higher investments, higher employment generation, higher growth, higher tax collection, lower trade and fiscal deficit, higher credit rating and lower poverty levels.
Read the full article at http://www.bloomberg.com/news/2012-12-11/india-must-tap-household-temple-gold-to-reduce-imports.html