People in India buy gold for a number of reasons. While some believe it is an amazing asset with a good valuation, some believe it as auspicious. India, which is the second largest consumer of gold, reported its lowest monthly import volumes in over a decade now because of the sudden stoppage of air transport and shut jewellery stores across the country.
The overseas purchase rate dropped by 99.5% to 60 kilograms in April which was around 13 tonnes just the month before. This is reported to be the lowest monthly inflow in records since 2010, as per the data available from Metals Focus Ltd.
Chirag Sheth, a consultant at the London-based Metals Focus reported saying that the increase in the growth in imports or even demands is likely not going to be the same in the coming three to five months. Not just that, he reported that it is likely that the manufacturing in this sector will also be affected because of the scarcity of the workers.
The nationwide lockdown that has been imposed since March 25 has created ripples through the economy of the country. Not only has it impacted the jobs of the people but has shattered several businesses too including gems and jewellery.
N. Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council said that the imports of gold were impacted mainly because majority of the same is shipped by air. A smaller volume of the import is channelled via land from Nepal and Bangladesh.
With India being it its Lockdown 3.0, the country has significantly eased some of the restrictions. But, it is unlikely that the same will salvage any of the hit to the economic growth in this quarter or even the entire fiscal year.
The GDP is expected to contract by 24.8% year on year while the overall resurrection of the economy will face multiple challenges because of the implementation of the new virus protection protocols. The same will also experience a hit because of the lack of availability of labors and working capital.
Majority of the jewellery store owners have just one question in mind at the moment. “Even if we open the stores, who will come to buy?”
India has been on a complete lockdown since March 25, with minimal ease on restrictions in some of the areas around the country.
