TOKYO - If history is any guide, the Indian government should be happy the country is accumulating gold, since gold always flowed out of waning nations into rising powers. But the successive governments, including the current one led by Prime Minister Narendra Modi, have been working hard to curb gold imports.
The love of gold in India and China is well known around the world. Because both countries have a population of more than 1 billion, gold demand from these countries has been increasing significantly as economic growth lifts their citizens' incomes. Nowadays, either country alone could import as much as 1,000 tons of gold per year.
According to the World Gold Council and others, global consumer demand for gold for the year ended last September came to roughly 3,354 tons. India and China accounted for about a half that figure between them. But the two governments' reactions to the growing influx of gold are polar opposites.
The Chinese government has made it easier for people to purchase gold through deregulation. The Indian government, on the other hand, introduced new regulations to discourage its people from buying so much gold.
In India, people have been buying gold as jewelry for ages. For example, parents buying gold jewelry for their daughters is an age-old tradition. The daughters take the jewelry as a part of their dowry when they get married.
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