........“Gold has no intrinsic value and yet the demand for it keeps rising. We must remember that offering gold as dowry or to God must be reduced. Indians must offer 2 karat gold instead of 24 karat for religious purposes,” Dr Chakrabarty said at a regional banking summit. Emphasising the need for a social revolution in India, the Deputy Governor said “the culture of wearing gold ornaments was when we were a rich country but now that we are poor, we cannot continue the same.” He observed that the yellow metal cannot fetch returns without selling it. Usually, selling gold is the last resort for Indians.........
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The RBI Deputy Governor could have avoided such casual comments on gold. Bringing down gold import is the need of the hour. The best way to achieve this is to ‘unearth’ the domestic gold stock and bring the gold hoarded in households, accumulated in various religious institutions and with others for unethical use. There may not be a common cure for all these ills. But reducing the purity of gold offered to temples (in the absence of any user-friendly and reliable way to check purity of gold, this must be happening already, God knows!) should not be suggested as an option by a banker.
Introduction of Gold-backed financial instruments which can be held in electronic form, in addition to the present Gold ETFs could another option. This should be widely marketed, with sovereign guarantee and easy liquidity. When ‘paper’ or ‘electronic’ gold is made available for investment, it would become easy to bring household savings invested in gold to the mainstream.
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