AOJ E-NEWS :A day after Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 currency notes would cease to be legal tender from the midnight of November 8 – a move aimed at cracking down on the flow of black money – those in possession of unaccounted wealth were seen rushing to jewellers to buy gold. While these people were willing to pay huge premiums, jewellers were ready to accept old currency notes. The transactions took place on past-dated bills; even VAT was paid. As a result of this rush, there was a sudden spurt in demand for gold. According to market estimates, as much as $1 billion worth of gold, or around 30 tonnes, has been imported since November 9.

GFMS Thomson Reuters estimates that India’s gross official import of gold was worth nearly $1.5 billion as of November 14. Of this, as much as $900 million worth of the metal was imported after the demonetisation of high-value legal tenders. While this estimate does not exclude gold imported for exports, such gold would have been a small part of total imports. It should be noted that the government had last month said that for according the status of a nominated agency, the export of gold jewellery from export-processing zones (EPZs) and export-oriented units (EoUs) would not be taken into account.

For the month of October, Arresting the eight-month fall, gold imports more than doubled to USD 3.5 billion on account of high festival demand. Gold imports had stood at USD 1.67 billion in October last year, official data released today showed. The imports of the precious metal were on a decline since February this year till September. The increase in gold imports pushed the trade deficit to 10-month high of USD 10.16 billion in October from USD 9.69 billion during the same month last year.

The imports mainly take care of demand of jewellery industry.
The jump in gold imports will also impact the current account deficit (CAD).

Silver imports, however, dipped by 49 per cent to USD 181.93 million in October as against USD 355.38 million in the same month last year.

The country's total official gold imports declined to 60 tonnes in April-July of this fiscal, much lower than 250 tonnes in the year-ago period.

Courtesy: BS