India Insight

Deficit? What deficit? India makes a golden version of everything

August 2, 2013

(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.

“It was my dream project to make such a bike, which has never been made before in the Indian markets … Moreover it’s not for sale, so neither have we priced it nor have we marketed it,” Kothari said. The bike cost around $100,000.

The bike is a successor to the GoldPlus Tata Nano. Unveiled in 2008, the Nano was billed as the world’s cheapest car. The gold version, from 2011, was studded with 80 kilograms of 22-karat gold, 15 kilograms of silver, and gemstones.

While a standard Nano costs 155,000 rupees ($2540), this variant was worth 220 million rupees ($3.6 million based on today’s exchange rate).  The car was not for sale, but was a branding and promotional initiative of a Tata group company.

Now there’s a credit card. In June, IndusInd Bank launched Indulge – the first credit card in India with 22-karat gold inlay.

“The underlying philosophy for a card with a gold inlay goes deep into the Indian psyche,” the bank said in its June press release. To get the card, you must pay 100,000 rupees ($1,640) as membership fee and 10,000 rupees a year for this card, which comes with “no-preset-spending-limit”.

In 2012, Datta Phuge, a 32-year-old money lender, bought a shirt made out of solid 22-karat gold for $250,000 dollars. The garment had more than six Swarovski crystal buttons, an intricate belt of gold, and weighed about 3.3 kilograms.

The shirt, based on royal knightly armour by designer Tejpal Ranka, took 15 goldsmiths two weeks to make, each putting in 16 hours a day.

And who can forget Bollywood singer Bappi Lahiri, also called the ‘Disco King’.

The 60-year-old singer, who called himself the “original bling man of India” in 2012, is mostly seen sporting numerous gold chains and bracelets.

“People are resorting to all things blingy now, but I was the one who started this trend! Honestly speaking, most of this gold has been bought ages ago, at very economic rates,he told the Times of India in 2012.

(Siddesh Mayenkar contributed to this post. You can follow Aditya Kalra on Twitter @adityayk and  Siddesh Mayenkar @Mayenkar)

Comments
2 comments so far | RSS Comments RSS

Addiction to Gold by Indians is akin to the addiction to Opium by the Chinese in 19th century. It has the ability to weaken what could otherwise have been strong economies with wasteful expenditure that siphons out crucial foreign exchange. Controlling the trade of gold enables all sorts of leverage over the entire country.

Posted by Alchemy1 | Report as abusive
 

Although I’m a fan of gold, I certainly can’t see the point in creating such pieces with such valuable materials like diamonds and gold. What is wrong with a simple piece of diamond jewelry. I feel that is enough of a statement. The above creations cannot be helping the economy in India.http://www.acsilver.co.uk

Posted by AndrewCampbell | Report as abusive
 

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