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Import Of Gold To Indian Economy Essay

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Importance of gold in Indian Economy
The importance of gold in India is primarily attributed to three reasons: its monetary value, risk aversion quotient and investment. History states that gold was once used as the unit of currency. In India gold occupies a significant role in the social and economic life of poor and rich alike. Regardless of their caste and creed, Indians consider gold to be the most tangible form of investment. Gold remains the easiest asset and investment for the poor because of its liquidity, availability and ease of sale and purchase in the market. More than half of the India’s gold demand is from the rural sector. Abreast of the economic and social considerations, acquisition of gold is considered as auspicious and it is passed on from one generation to the other.

India is among the largest consumers of gold in the world (874 tonnes in 2013). The imports of gold have been rising relentlessly in the recent years despite of the sustained increase in gold prices. Large import of gold in times of soaring gold prices is one of the major reasons contributing to the bulging trade deficit. The decline the current account deficit due to large import of gold has …show more content…

As it can be seen in Table.2 the import of gold has increased from approx US$ 40 billion during 2011-12 to about US$ 56 during the year 2012-13. Both price and quantum factors have lead to rise in Import of gold in India. The international gold prices rose by 34 per cent in 2011-12 in comparison to 21.6 per cent growth rate during 2010-11. Also the quantum of gold import increased by 9.2 per cent in during year 2011-12 as compared to 12 per cent growth in year 2010-11.Inspite of government introducing a range of measures to curb imports, India’s gold demand remained buoyant in calendar 2013 at 974.8 tonnes which is up by 13 per cent in comparison to the figure for the year

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