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Gold imports fall sharply post-demonetisation

Mar 12, 2017 09:32 PM IST | Source: PTI

Gold imports reduced to 54.1 tonnes in December and 53.2 tonnes in January from a high of 119.2 tonnes in November, the month during which the government scrapped the old Rs 500/1,000 notes.

Gold imports fall sharply post-demonetisation

The Centre’s demonetisation driveis seemed to have a significant impact on the gold demand inthe country as imports of the metal dropped sharply inDecember and January.Gold imports reduced to 54.1 tonnes in December and 53.2tonnes in January from a high of 119.2 tonnes in November, themonth during which the government scrapped the old Rs500/1,000 notes.The decline in January is 43 per cent from the goldimported in the corresponding month in 2016.The sudden decision to demonetise the old high valuenotes led to a massive cash crunch in the country impactingdemand for various commodities, including precious metals.According to an RBI assessment paper, afterdemonetisation, the domestic demand for gold (or gold items)spiked suddenly, with “buyers reportedly willing” to pay hugepremiums to dispose of old currency notes with jewellers.”Reflecting this development as well as the seasonaljump, the volume of gold imports surged in November, evenabove the elevated October level. Gold imports, however,declined sharply in December 2016 and January 2017,” the papersaid.The RBI said that around 80 per cent of the gems andjewellery purchases in India are made in cash and consumerdemand was reported to have been impacted due to the cashshortage.India is one of the largest gold importers in the world,and the imports mainly take care of demand from the jewelleryindustry.In volume terms, the country’s total gold importsdeclined to 546 tonnes in April-January of this fiscal, muchlower than 892.9 tonnes in the year-ago period.Total gold imports had totalled 968 tonnes in 2015-16.PTI NKD RR CS MKJ.