Jan 14, 2000|
Gold imports take a dip
According to newspaper reports, gold imports have taken an abrupt downward turn in the current fiscal year. Although the reason for this is yet unclear, the rise in international gold prices could have adversely affected demand.
Gold imports taper down...
The decline in the imports of gold has come at a time when the country is faced with the prospects of a substantially higher than budgeted oil import bill. Thus the pressure on the current account deficit would be partly off set. Moreover, lower gold imports imply that lesser amount of domestic savings are fleeing the country, implying that more funds a re available for investment in the domestic economy.
A sharp rise in international gold prices has also adversely impacted the import demand. The gold prices had earlier registered a sharp upward trend in September on the announcement that central bank sales of gold would be drastically reduced over the next few years.
Apart from the rise in international gold prices, the emergence of attractive investment opportunities in the domestic markets may also have contributed to this decline in imports. For example a pick up the real estate and stock market activity could have influenced this diversion of savings.
Over the last few years gold imports have risen sharply on account of the liberalisation in import policies. If the Indian economy were to further gain momentum then, atleast in the near term, we can continue to expect lower gold imports as lucrative investment opportunities in the domestic sector continue to present themselves.
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