(Any opinions expressed here are those of the author and not of Thomson Reuters)
Indians use gold for all sorts of things. As the world’s biggest gold consumer, its citizens use coins, bars and jewellery as gifts, dowries and investments that are literally more solid than a share in a company. The ill effect that this has on India’s current account deficit has led the government to try to curb demand. Here are a few examples of demand that nobody can seem to curb.
This week, gold importer RiddiSiddhi Bullion’s subsidiary Dia Jewels unveiled India’s first gold-plated motorbike. About 35 to 40 kilograms of silver went into making the miniature two-wheeler model, which is gold plated and studded with diamonds, and took six months to make, said Mukesh Kothari, director of Riddisiddhi Bullions.
The BSE Sensex lost 3 percent in the week ending Aug. 2, extending its losses from the previous week and marking its biggest weekly fall since mid-March.
Markets remained on the edge on uncertainty over how long the Reserve Bank of India (RBI) would continue measures to defend the rupee. The rupee fell 3.4 percent over the last five trading sessions and ended at a record closing low on Friday.
Nearly 70 percent of India’s population lives on less than $2 (around 120 rupees) a day, according to World Bank data. The country, the world’s second-largest producer of wheat and rice after China, is also home to a quarter of the world’s hungry.
Helping the poor has always been on the ruling government’s agenda since independence. India, which currently spends 900 billion rupees on giving the poor access to cheap food, hopes to increase it to 1.3 trillion rupees ($22 billion) and widen its scope with an ambitious food security programme launched this month.
It was a good week for Indian shares as the BSE Sensex gained 1 percent to close at 20,149.85, after the index touched a near two-month high during trade on Friday. The rupee gained for the second week and ended at 59.35/36 after rising 0.3 percent.
Markets reacted negatively on Tuesday to the Reserve Bank’s moves to tighten liquidity in the system in a bid to support the weak rupee. However, Prime Minister Manmohan Singh said on Friday that these steps may be temporary.
With the rupee hovering near a record low, Indian tourists would be tempted to give foreign shores a miss this year. But staying home is not an option for Harsh Chadha, a multinational executive just back from a three-week family vacation in the UK.
Chadha, 35, is part of India’s growing elite, whose trips abroad are not affected by the vagaries of the currency market.
Google Trends shows that the term “current account deficit” is among top searches from India in 2013. Add “gold” as a comparative keyword and the searches for the commodity Indians love are far higher.
Indians buy gold for everything – investment, gifts, wedding ceremonies and auspicious days. But of late, this has become a pain for policymakers.
Thousands stranded in parts of northern India awaited rescuers on Wednesday as floods caused by heavier-than-usual monsoon rains killed at least 150 people in worst-hit Uttarakhand.
Prime Minister Manmohan Singh announced a 10-billion-rupee aid package for the state after he and Congress president Sonia Gandhi did an aerial survey of the flood-hit region.
Indian markets struggled in trade on Thursday with the Sensex falling more than 200 points while the Nifty sank over 50 points. Weak Asian markets also weighed as the Nikkei slumped more than 800 points on worries the U.S. Fed would trim its stimulus programme in the coming months.
The rupee also remained weak, trading below 58 versus the dollar, as Finance Minister P. Chidambaram did not announce any concrete steps to arrest its fall.
Fitch Ratings revised India’s sovereign rating outlook to “stable” from “negative” on the back of measures taken by the government to contain the budget deficit, it said in a statement on Wednesday. The rating agency had cut India’s outlook to negative in June 2012 and currently has a ‘BBB-‘ rating for the country.
“Fitch expects the government to broadly meet its FY14 budget deficit target of 4.8 percent of GDP (including privatisation receipts) and to gradually reduce the high level of public debt over the medium-term,” the rating agency said.
The cabinet on Tuesday approved the much awaited Real Estate (Regulation and Development) Bill that proposes to make India’s largely unregulated and once booming real estate sector more transparent.
Ajay Maken, minister of housing & urban poverty alleviation, in a government statement said the bill provides for a uniform regulatory environment to protect consumer interests and ensure orderly growth of the real estate sector.