Economy
With economic jitters, gold imports surge 85 percent
IndiaÂ’s gold imports surged 85 percent in January 2016, indicating how, as stock markets decline and some economic indicators worsen in the run up to Finance Minister Arun JaitleyÂ’s third budget, Indians are falling back on a traditional mode of holding wealth.
 
It is reasonably clear that Indians, who hold around 20,000 tonnes of gold — about a tenth of all the world’s gold and a fourth of current global gold demand — are reluctant to convert the gold they store into money or other forms that could benefit the economy.
 
In 2015, the government started a Gold Monetisation Scheme — a revamped version of an older Gold Deposit Scheme — to make idle gold productive, by getting consumers to either sell their gold or store it with banks, so it could emerge into the formal economy and reduce the country’s gold imports.
 
But, only 900 kg of 20,000 tonnes, or 0.0045 percent of India’s idle gold, emerged; one percent of gold so “monetised” could release Rs.54,000 crore (almost $8 billion) and strengthen the Indian banking system.
 
The 20,000 tonnes of gold, held privately by individuals and temples, is valued at Rs. 54 lakh crore (at the current price of Rs.2,690 per gram), three times the revenue expenditure of Rs.17.77 lakh crore in union budget for 2015-16.
 
Gold imports rose to $2.91 billion from $1.57 billion in January 2016 over previous year, according to the ministry of commerce.
 
Indians like goldÂ’s stability in an increasingly unstable world
 
“The rise in imports of gold signifies a shift in focus of investment from the volatile financial markets to comparatively stable bullion markets,” U R. Bhanumurthy, a professor at Delhi’s National Institute of Public Finance and Policy (NIPFP), a think-tank, told IndiaSpend.
 
Gold imports have fluctuated though, increasing 2.4 percent in the first three quarters of 2015-16 (over first three quarters of 2014-15), then soaring 85 percent in January 2016, over January 2015.
 
The demand for gold has coincided with some weakening economic indicators.
 
For instance, exports declined 17.7 percent from April 2015 to January 2016, the weakest export performance since 2000; the previous low was a 3.5 percent decline in 2009-10.
 
The year (April 2015 to January 2016) also saw imports decline 15.5 percent, the greatest fall in 15 years. The previous largest decline was 8.3 perccent in 2013-14.
 
While import costs of crude petroleum and petroleum products — accounting for 31 percent of imports in 2014-15 — almost halved, the quantity of petroleum (crude plus products) imported increased, indicating growing fuel demand in India.
 
Oil import costs dropped 41 percent while non-oil imports costs fell only three percent over April to December 2015, as compared to the same period the previous year.
 
India is buying more petroleum at lower prices, levying excise and selling it at higher prices, as IndiaSpend reported earlier.
 
Agriculture imports increased 21 percent over first three quarters of 2015-16, as India struggled with two successive years of drought, the first time in 30 years.
 
Global slump cuts investments in India
 
Subdued global demand over the past three years — ”reverse globalisation” as NIPFP’s Bhanumurthy put it — has resulted in currency devaluation of emerging economies. Combined with falling oil prices, world trade has slackened.
 
Although India anticipates an economic growth rate between 7 percent and 7.5 percent – higher than China’s – market volatility has also increased, jeopardising future growth.
 
Investors are shying away from equity markets. Stock markets across the world plunged in early 2016. Foreign investments in India, both direct and portfolio, are declining.
 
Portfolio investment (foreign investments in Indian stock or bond markets) was hit, as foreign investors withdrew Rs.11,000 crore ($ 1.6 billion) in January 2016 from Indian markets.
 
In the same month, Indians bought gold worth Rs.20,000 crore ($2.91 billion) from the international market.
 
Gold imports make Indians feel safe, stable, but the economy is destabilised
 
So, Indian investors are turning to safe, stable gold — but by doing so, destabilising India’s economy.
 
“Large gold imports are adversely impacting the current account deficit (imports of goods, services and investments minus exports; a trade deficit),” said a draft report of a Reserve Bank of India working group to study issues related to gold and gold loans by non-banking finance companies. “There is a need to moderate the demand for gold imports, as ensuring the external sector’s stability is critical.”
 
Domestic demand and imports are “price inelastic”, which means Indians buy gold for household use irrespective of the prices in Indian and international markets, the report said.
 
IndiaÂ’s gold exports halved over four years from 2011 till 2015, a sign of declining demand from the United Arab Emirates (UAE), home to two million Indian expatriates. More than 99 percent of IndiaÂ’s gold exports go to the UAE, according to commerce ministry data.
 
An import duty of 10 percent, imposed in 2012, raised the cost of gold 10 percent over the year, but failed to moderate demand for gold, said an RBI report, which recommended “innovative financial instruments” to draw gold out of private holdings.
 
Sovereign gold bonds, which are government bonds acting as substitute for physical gold, were first sold in November 2015, receiving a subscription of Rs.246 crore. The second round, in February 2016, tripled the first round by attracting Rs.726 crore.
 
The overall economic uncertainty is also reflecting in gold imports.
 
The January jump in gold imports has now transformed into a February slump, with trade associations, such as the All India Gems and Jewellery Trade Federation and the India Bullion and Jewellers Association, recommending that the finance ministry reduce the import duty on gold from 10 percent to two percent.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Western Railway cuts special train services from 7,039 to 204
Bhopal : In the past more than a year-and-a-half since the BJP-led NDA government came to power at the Centre, the Western Railway has come down drastically on passenger facilities and sharply cut frequency of special trains from as many as 7,039 to a mere 204, an RTI report has said.
 
According to a Right to Information response to a query filed by Chandrashekhar Gaur, a resident of Neemuch district in Madhya Pradesh, as many as 63 special trains made 3,371 rounds during 2011-12 and 65 trains made 7,039 rounds during 2013-14 in the western region.
 
In the year 2014-15, the number of special trains reduced to 47 which made 1,781 rounds, while this number has further reduced to 21 trains in 2015-16 with only 204 rounds completed.
 
While there was heavy deduction in the number and rounds of special trains operating in the region, several premium and luxury train services were started in 2013, the information provided by the Western Railway said.
 
As many as 17 premium trains made 476 rounds in 2013-14, while 11 premium trains and five luxury trains operated during 2015-16 to make 394 rounds.
 
The railways run special trains during festivals and holiday season as the number of passengers travelling during this period increases.
 
These special trains also have air-conditioned and sleeper coaches, and the fare is equivalent to mail or express trains.
 
Passengers have faced numerous difficulties due to the reduction in the rounds of the special trains.
 
"While travelling during the festival season, we realised that the railway has reduced the facilities provided to the general travellers," Gaur told IANS revealing the reason behind the RTI filed by him.
 
"While the railway has cut down on the facilities provided to the passengers, it has increased its income by operating premium and luxury services. These trains do not have general coaches, and the railway charges for a berth. No category -- children or elderly -- get discount and the railways do not pay any refund on cancellation of journey," Gaur said.
 
"The government is empowered for the welfare of citizens, not to do business. In the past few years, the Western Railway, by deducting the facilities, has proved that the government is no more looking after the welfare of the people," he said.
 
"The government is not bound to run such special trains. But the railway ministry had been running such trains keeping in mind the people's needs," senior journalist Arvind Singh, who has served as an advisor to the railways ministry for a long time, told IANS.
 
"Railway Minister Suresh Prabhu has focused on income rather than the welfare of the travelling public. He has terminated the scheme of reduced ticket price for children. One should not hope for special trains under the present government," Singh told IANS over phone from New Delhi.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Bapoo Malcolm

1 year ago

You cannot ask the minister to bring the railways back to health and block his proposals.

It is said that if you ask a man to do a job, don't tell him how to do it.

The balancing job is crucial and critical. It is a difficult task. Not that it cannot be done, but are all of us prepared to sacrifice a little. If one clamours for a 10/5 rise in salary every year, is an equivalent rise in fares also not acceptable? Remember how Dinesh Trivedi was kicked out, by his own leader, when he wanted a fare increase?

Very low fares also lead to unnecessary travel. Loss making has been the railways' mantra and somewhere it needs to be checked. All said and done, SAFETY has to be the premier issue.

Agitators damaging public property must pay: SC
New Delhi : The Supreme Court on Wednesday said it would lay down guidelines to act against people damaging public property and holding people to ransom in the course of their agitation as it wondered where was the country heading.
 
Agitators can't destroy public property and hold everything to ransom to get their demands met, said the apex court bench comprising Justice Jagdish Singh Khehar and Justice C. Nagappan underlining that those involved in destruction of public property would not escape the consequences of their actions.
 
"What is happening? Where is our country (headed for). One cannot burn the country's property. You can agitate peacefully. But what is this? - burning and ransacking", the court said with an obvious reference to the recent Jat agitation in Haryana which resulted in damage and destruction of public property, dislocation of public transport including disruption of water supply to the national capital.
 
The court's strong observation came in the course of the hearing of a plea filed by Gujarat Patidar Anamat Andolan Samiti (PAAS) leader Hardik Patel, seeking the quashing of sedition charges invoked against him by the Gujarat Police. 
 
Saying that people and political parties must pay for damaging public property, the bench said, "We must take call on the issue and frame guidelines."
 
The court said it would address the larger issue after Attorney General Mukul Rohatgi told the court that petitioner Hardik Patel had sought the quashing of the FIR accusing him of sedition.
 
He said now the chargesheet has been filed before the trial court and the same could not be tested by the top court.
 
The court was also told Hardik Patel's plea for bail was still pending before the sessions court and it (apex court) should hold back the plea for bail till it was decided. 
 
As the counsel for the Patidar leader sought adjournment of the hearing, saying that senior counsel Kapil Sibal was engaged in another court, the court said it would hear the matter on Thursday (February 25) indicating that the focus would be on the larger issue of ways to deal with agitators involved in destruction and damage of public property during an agitation. 
 
Gujarat Police has accused Hardik Patel of sedition for an incident in Surat wherein the Patidar leader was caught on camera telling one of his followers that instead of committing suicide he should take revenge on the policemen.
 
Sibal had said, in the last hearing, that even if whatever Gujarat Police was saying was to be accepted, even then it did not attract the sedition charge.
 
Hardik Patel is leading the Patidar agitation, seeking reservation for Patels in education and jobs.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Anand Vaidya

1 year ago

It is high time that destruction of nation's public & private property, killing of people / death of security forced be considered intentional crime and whoever instigates or leads such protests be punished with penalties AND mandatory jail term.

It may even be a good idea to ban mass protests for 5years. Peace is the first necessity for development. The HR agitation already seems to have caused 20,000 crore loss. Who will pay for this?

REPLY

Meenal Mamdani

In Reply to Anand Vaidya 1 year ago

I sympathize with your anger and agree that we must hold the political leaders who instigate violent protests accountable for the actions of their followers. Fines in proportion to the damages caused should be assessed on the leaders personally and/or their parties. If there has been loss of life, then the leaders should have criminal cases lodged against them.

BUT, we cannot ban protests in a democracy. This is our fundamental right to freedom of expression and as long as it is peaceful, it should not be banned.

MG Warrier

1 year ago

Responsible citizens like Kapil Sibal, who is defending the accused, should also take observations like “"What is happening? Where is our country (headed for). One cannot burn the country's property. You can agitate peacefully. But what is this? - burning and ransacking", from the Apex Court seriously, and back in the legislature, initiate debate on such issues for creating awareness and formulating ‘code of conduct’ for those leading agitations. The judiciary should not be burdened with the responsibility of providing guidelines for protecting public property during agitations.

Meenal Mamdani

1 year ago

Supreme Court did the right thing by putting organizations and political parties on notice that if the leaders use language that incites their members/followers to violence, then the org./party would have to pay monetary damages and perhaps even jail terms in case the carnage is horrendous.

While I fully support the above position, I wonder how easy it will be to prove that the lumpen committing the criminal acts are actually followers/members of a particular organization/political party and following the leader's call to action.

Also looking at the ease with which a TV channel slanted a video to its point of view recently, will we get unbiased tapes to prove that the leaders were actually inciting their followers to commit acts of violence?

Nonetheless, I heartily support such a case being filed and monetary damages awarded so there would be a chill and the impunity enjoyed by the political operatives would be shredded.

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