India, no doubt, has always been the largest consumer of gold in the world. But after the Gold Control Act, 1968 was rightly scrapped in 1990 because it was ineffective, the pendulum swung to the other extreme. From 1991 onwards, a series of measures have been taken to facilitate supply from abroad – restrictions on imports as part of personal baggage, on imports by private trade and by banks were gradually removed and customs duty was reduced by 75%. The government also revealed its intention to establish a Gold Trading Centre and make India a gold trading hub. Towards the end of 2003, after MCX became a major commodity exchange, forward trading in precious metals was permitted and, today, the turnover in gold and silver dominates the futures market in Indian commodity exchanges. All these measures naturally led to a perception that the government did not frown on gold imports. This perception was grounded in reality; it was actually promoted by senior officials who argued that a positive approach was “demonstrably less disrupting and more consistent with the socio-economic conditions in the country than a negative approach to gold”. This was despite conclusive evidence in economic history of Indian society being a bottomless pit for gold. The authorities refused to perceive the disturbing implications of the transfer abroad of huge amounts of hard-earned savings of the community in exchange for such an unproductive asset.
Posted on: Sat, 07 Sep 2013 06:34:45 +0000
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