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Monday, November 18, 2013

Indian Gold lust.... Finance Ministry says 'No" ~ Postal Dept floats tender......

The Indian love story for the ‘yellow metal’.....has no 7 year itch !!  .. it is Rs.2917/- for 1 gm of 22 ct gold. When there are too many voices ~ it is cacophony… but can different organs of Govt. speak discordant notes !!!!

Though I am a strong advocate of buying Gold in e-form, the yellow metal does offer a personal satisfaction to hold and have in solid form.  Most times you would find those shops in T Nagar and elsewhere – those shops selling gold, extraordinarily crowded, colourful, bustling with activity and chaotic at times ! – there are people, who as routine buy small units of gold every month and there are others who buy on festive occasions, important occasions to make them memorable, for marriages and so on.. all those make up those unmindful crowds at jewellers.

It is not traders ~ but  Nationalised banks and Post Office too that joins the race in selling gold coin and trying to make their presence felt….  Postal Dept claims that their gold is pure 99.9% certified by Valcambi of Switzerland and the logo of postal department inscribed on the coins and they cannot be tempered.  The Gold Coin Rates or Price of Gold Coin  sold by Banks is  higher than the gold prices in the bullion market as banks keep huge margins.    Understand that most  of the banks in India import gold coins from Switzerland tying up with Companies abroad who earn their share of profit, through MMTC. 

Not long ago, you read the news that following the Centre's decision to halt the import of gold coins and bars in the country, the department of post was to stop their sales from its counters from August 1.  There is no scarcity of lovers of foreign gold and those who buy them.  The Finance Ministry and PC felt that import of gold is the vice that is ruining the Indian economy and took measures to curb gold imports and kept advising people to stay away from buying gold. 

Here is today’s news in TOI which speaks of the diametrically opposite position of Finance Vs Communications & IT – on the import of gold.

In August, the finance ministry had banned banks from selling gold coins, which are mostly imported into India, in order to contain the country’s burgeoning current account deficit (CAD). But on November 6, the department of posts, which is under the ministry of communications & IT, floated a tender for the supply of gold coins, which is to be sold to the department for onward selling through post offices. The tender closes on November 27, according to the central government’s Central Public Procurement Portal.

 In fiscal 2013, India imported 850 tonnes of gold valued at about $58 billion, which was one of the main causes of the country’s burgeoning CAD that year. In the current fiscal, thanks to the government’s proactive steps to contain gold imports, the figure is estimated to drop to around 800 tonnes, but it is still a large figure.

Questioning the rationale behind the tender by the department of posts, S Sudhakar Reddy, general secretary, Communist Party of India (CPI), has written to the Prime Minister to look into the matter and make the government’s position clear on import of gold coins. “If banks selling gold coins are strictly being discouraged, how could post offices selling gold coins be encouraged?” Reddy has questioned in his letter.  On October 22, finance minister P Chidambaram had said that the ban on the import of gold coins and medallions would continue. He had also said that banks were directed to follow the ban strictly.   In his letter to the PM, Reddy said, “Despite the… ban, I am surprised to see that while the finance minister holds a specific view on the import of gold coins, the ministry of communications and information technology holds a divergent view on the same. Gold coin import and to float the tender by the department of posts immediately implies encouraging import of gold coins once again. With a heavy import bill burden already on the economy, why is the government not having a uniform view regarding sale of gold coins? Given the above, your views and intervention on the government status on sale of gold coins and its imports are being requested.” [the coloured portion reproduced from TOI, Chennai edition of date.]

Perhaps the communication of the Finance Ministry asking commoners to desist from buying gold especially during the gold rush Deepavali celebrations, never reached the Postal Dept.
With regards – S. Sampathkumar.

18th Nov. 2013. 

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