News Room | May 10, 2017
After an enduring demonetisation shock in the last quarter of CY2016, the rise of gold demand in India by 15% to 123.5 tonnes during the first quarter of CY2017 shows a return of optimism in the industry. According to the World Gold Council (WGC), the total gold demand in India stood at 107.3 tonnes in January – March 2016, which was impacted by jewellers strike due to an introduction of excise duty. So, in value, the gold demand grew by 18% to Rs. 32, 420 crore in Q1 2017 against Rs. 27, 540 crore in Q1 2016, as reported by the latest report of Q1 WGC. This outstanding growth indicates not only a return of optimism but also the resilience of the industry that has been going through a tough challenge since 2013.
According to the World Gold Council, this spurt in gold industry has taken place due to the Government’s remonetisation efforts. By March-end, 85% of the value of the currency which was removed from circulation under demonetisation had been returned. In addition to this, the RBI’s mitigation of temporary restrictions on the withdrawal of cash from bank accounts has also contributed to the growth of gold demand.
In fact, despite the dissension on demonetization, the Government’s push for a transparent currency system in the nation has led this incredible shift in the gold market. As a large number of consumers are gradually indulging in cashless payment post demonetization, bolster performance of the organised retailers such as national chain Tanishq, Kalyan and other major giants is coming to our notice.
However, the likely implementation of GST brings in a wary in the market as it might weigh on demand until the time the Government finally decides for the implementation of GST in early July. WGC feels that the demands for gold in India are robust at 800 to 900 tonnes per annum but the performance depends on end number of factors, such as the progress of monsoon, price and many others. Nevertheless, WGC is hopeful that shortfalls if any in next one or two years on account of GST implementation will be recovered in the subsequent years.