Chidambaram is practicing what he preaches to his compatriots – embargo on buying gold for household

High gold demand and new investment opportunity in gold products is giving Finance Minister a headache. Indian women's fascination and unending lust for gold will not abate with the growing tension of FM. The current account deficit (CAD) of India rose to a record of 5.7 per cent of GDP in last three months of 2012. The contribution of gold in this was about one third. Risk-averse FM has three options to keep the CAD under control: first boost exports, which seems difficult with global economies undergoing recessions. Second, reduce oil imports- which is impossible if India wants to achieve its energy security and third reduce the gold import which is the major import contributor after oil. The FM was left with no choice but to put a check on gold imports budget airline tickets to amsterdam by raising import budget airline tickets to amsterdam duty on gold to 15 per cent. Results were seen in July-August when India gold's import crashed 95 per cent to 2.5 tons from months before. budget airline tickets to amsterdam The government aims to reduce the CAD from $88 billion, or 4.8 per cent of GDP to $70 billion or 3.7 per cent of the GDP in 2012-2014, desperately trying to curb non-essential imports to achieve its target.
It's a common fallacy to make an assumption that Indian buys gold mostly in the form of jewelry. Indian women hold about 10% of the world gold reserves which is more than combined reserves of several countries. Even middle class people put away a significant portion of their earnings for gold. An Indian housewife will cut corners and save money to buy a piece of gold. Gold has a special status socially, culturally and economically in the minds of Indians. budget airline tickets to amsterdam Indian's love for gold is timeless. During festivals like Akhshay Tritiya in April and Diwali in November, when buying gold is a ritual in India, there is almost 5 fold increase in footfall of gold buyers. According budget airline tickets to amsterdam to Morgan Stanley report Indians privately holds more than 20000 tons of gold which is rarely traded in domestic market.
In fact, the over the last few year gold has become a preferred investment asset. The five year rate of return on gold (between Jan 2008 and Jan 2013) is 170 per cent whereas equity has delivered a negative return of 4per cent. The only competitor in terms of returns to gold is another class of shiny metal, Silver. Gold is also a good option of hedging against inflation, which erodes the value of paper assets faster than that of precious metals. It is also a safe asset at the time of slow economic growth. Moreover investors need not to buy physical gold to invest. These can be traded at exchange through exchange traded funds (ETFs).
India was the number one buyer of gold in the world in 2011 but stood nowhere in the list of top gold producer. Most of its gold needs are met through imports. With so much gold in private hands and growing budget airline tickets to amsterdam need of gold its makes extremely difficult for FM to monetize the nations gold to support its economy. FM agrees and looks forward to device policy to bring out the hidden gold while ensuring access to the formal banking budget airline tickets to amsterdam sector for almost half of India's population.
Chidambaram is practicing what he preaches to his compatriots – embargo on buying gold for household. He says " I have never bought gold at any point of time in my life. I don't wear any jewelry — be it a ring or a chain " further he added " For me gold is just another metal; it just shines a little bit more ."
He is an electronics engineer and is currently pursuing full time M.B.A in Energy and Infrastructure (Finance) from School of Petroleum Management, Gandhinagar. In past he has been associated with Tata Consultancy services Ltd for 3 years as a system engineer. He has also done research work for Indian Oil Corporation during his Internship and helped them to understand the role of media in branding.