How the average Indian gold investor contributes to black money pool

They say it is all stashed away in foreign banks like Swiss Bank and other safe-havens. But a chunk of black money comes from Indian public who buy gold!

Be frank with me: How many of you demand for bills when it comes to buying Gold from a jeweller? To save your hard-earned money, you court compromise and decide not to take bills from jewellers in exchange of a discount. You get your gold and the jeweller gets a killing, which goes unaccounted.

You cheer for Anna Hazare. But, maybe it would not be unwise to look into you and behold the hypocrisy!

Gold is deemed to be a safe haven asset. And certain reports say that retail gold jewellery market in India is worth 1 trillion rupees.

With inflation spiralling out of control and rallies in commodity and equity markets losing steam on and off, not to speak of the complicated nature of investing in the same; lay man invest in gold jewellery.

No wonder, Tier II and Tier III towns are driving gold demand in India. Because, that is where the laymen live. In addition to savings bank accounts and other saving options like Post Office saving schemes, they have little other options to invest. And they go for gold!

But there is little doubt that people who live in the bottom of the pyramid in these towns would always demand for record of transactions or bills.

Exact figures ever-evading; no one can say what percentage of the Gold being bought contributes to the black money pool. Anyhow, it would amount to a significant portion of the one trillion rupee sized retail jewellery market.

The layman being value conscious is “penny-wise”. And he cannot be expected to be “pound foolish”. But this caution often overrides the ethical aspects and may ask them to skip a bill!

The Indian polity, at large is the ultimate loser. And you can see that 916 glitter in the eyes of the jewellers.

The evasion of tax that goes unaccounted paves the way for another issue. Since the sales are not recorded, proper data collection regarding the sales is not feasible.

This may even affect the macro-economic planning of the states and may render governmental policies useless, as gold is a strategically important commodity when it comes to the economic security of the nation.

The central bank governor of India had recently pointed out the non-availability of exact data hampering macro-economic planning.

As published in: http://www.commodityonline.com/news/How-the-average-Indian-gold-investor-contributes-to-black-money-pool-40909-3-1.html