How India’s inherited Love for gold is hammering Indian economy

Indians’ affinity for gold dates back to the Indus valley civilization ie around 5000 years ago. Over the years, numerous gold items have been recovered by the Archeological Survey of India (ASI) from different sites. With an abundance of gold, the ancient epoch (from 3000 BCE to about 1000 AD) is the phase when India was termed as the Golden Sparrow. Unsurprisingly, the affection for the yellow metal even today remains intact amongst all of us.

However the very ‘blind love’ that we inherited from our forefathers is literally hurting the Indian economy. Not just the rich class, the middle and the lower classes aggressively opt to invest their money thereon. Among the country-side inhabitants, a deep yearning for the precious metal consolidates as it guarantees security in tough times. A common perception amongst the Indians is that when the value of currency falls, the metal’s significance in the market doesn’t sway.

We buy it from shops being completely oblivious of how and from where the metal is being supplied to us- does the country produce in sufficient quantities or it has to import from foreign sources?

A report suggests that India from year 1990 to year 2017 averagely produced 2.3 tonnes of gold each annum. Aside from production, a trivial amount is also recovered from various recycling sources such as electrical devices, jewellery etc, which is termed as ‘urban mining’. India hardly manages to produce 3.0 tonnes of gold while the country’s annual consumption is around 700 tonnes.

In a nutshell, India produces less than 0.5% of the requisite gold while imports 99.5% of it from other nations. China is amongst the top 10 countries which supply gold to India in return for billions of dollars. Which consequently widens country’s trade deficit with other nations- an unbearable burden on Indian economy. Take this example- every time you drive your car from home to office, you conveniently reach your destination but you contribute to polluting the environment. A very miniscule contribution made by you to global warming. It’s not a lecture but this is how we burden the economy everytime we buy gold items from a nearby shop. Our lust for the glittering metal is gradually eating away the country.

Gold should never be a choice of investment of general public. You may be perplexed to know that gold investments in India have an average annual return of only 8.5% in last 10 years. Surprisingly Indian banks themselves provide an interest rate of 6% for your bank savings. This clearly illustrates that gold doesn’t yield as much as we perceive.

Gold is amongst commodities which are not the basic requisites for humans and, therefore, can be eschewed. Indians need to drop their crippling practice for the greater good.

Mrityunjay Chaubey is the editor in chief at The Youth. He hails from Indore. Before The Youth, He worked for Indian Defence News as a columnist and was a reporter at two other sports portals.