Gold imports, which have a bearing on the current account deficit (CAD), plunged 57 per cent to $ 6.8 billion (around Rs 50,658 crore) during the first half of this fiscal amid a slump in demand due to the COVID-19 pandemic, showed data by the commerce ministry.
In the corresponding period a year ago, gold imports stood at $ 15.8 billion (about Rs 1,10,259 crore). Similarly, silver imports during April-September 2020 too dipped 63.4 per cent to $ 733.57 million (about Rs 5,543 crore), the data showed.
The decline in gold and silver imports has helped in narrowing the country’s trade deficit, difference between imports and exports, at $ 23.44 billion during April-September 2020-21 as against $ 88.92 billion in the year-ago period.
India is the largest importer of gold, which mainly caters to demand of the jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually. Gems and jewellery exports declined by about 55 per cent to $ 8.7 billion in April-September 2020 amid the pandemic.
Over the past few months, gold prices have hit the roof. In fact, global investment demand for gold has grown by an average of 14 per cent per year since 2001 and the gold price has increased by almost eight-fold over the same period. Key factors behind this include emerging market growth, increased market access through gold-backed ETFs and surge of demand for gold among central banks globally.
In a recent interview to indoasiancommodies.com, Somasundaram PR, Managing Director (India), World Gold Council said, “Gold has significantly outperformed all major fiat currencies as a means of exchange. Gold’s position as an investment and jewellery has allowed it to deliver average returns of approximately 9% over the past 10 years, comparable to stocks and more than bonds and commodities. Gold’s traditional role as a safe-haven asset means it can demonstrate its qualities during times of high risk.”