201:, came out with Gold Control Act, 1962, which recalled all gold loans given by banks and banned forward trading in gold. In 1963, the production of gold jewellery above 14 carat fineness was banned. In 1965, a gold bond scheme was launched with tax immunity for unaccounted wealth. All these steps failed to yield the desired result. Desai finally introduced the Gold Control Act, on 24 August 1968, which prohibited citizens from owning gold in the form of bars and coins. All existing holdings of gold coins and bars had to be converted into jewelry and declared to the authorities. Goldsmiths were not allowed to own more than 100 g of gold. Licensed dealers were not supposed to own more than 2 kg of gold, depending upon the number of artisans employed by them. They were banned from trading with each other. Desai believed that Indians would respond positively to these steps and stop consuming gold and help conserve precious foreign exchange. New gold jewellery purchases were either recycled or smuggled gold. This legislation killed the official gold market and a large unofficial market sprung up dealing in cash only. The gold was smuggled in and sold through the unofficial channel wherein, many jewellers and bullion traders traded in smuggled gold. A huge black market developed for gold. Goldsmith were an unorganised labour force and could not cope with the new developed situation. Only a few could get the licence to hold the gold, that also in very small quantities, with the result that the members of the
288:
areas. During good monsoon years, Indian government can sell its gold reserves at higher price catering to the gold demand from rural areas, to finance the surplus food grains purchase obligation at minimum support price (MSP) and the supply of adequate imported fertilizers to farmers. The depleted gold reserves could be purchased back later at lower price during the subsequent bad monsoon years with the funds after selling the food grain stocks at higher price to make up shortfall in the production. This analogy can be applied to all commodities and gold can be termed as super commodity with characters of international currency. Thus Indian
Government or Reserve Bank of India can overcome the economic crisis by effectively managing / hedging the gold reserves vis a vis food grain stocks or fertilizer stocks or crude oil stocks.
337:(FII) invested only 157 billion US$ in Indian equities. Gold imports cost is nearly 3% of the GDP. Alarmed by the huge trade deficit in the year 2012, GoI introduced moderate customs duty (below 10%) on gold imports. Though the policy is fetching good customs income, the imports demand is not drastically coming down. It is due to the reason that world gold demand is mainly driven by Indians and its price is fixed by Indians in Indian rupees. Imposing customs tax on gold imports in India or devaluation of Indian currency, led to the softening of its international price but remained range bound in rupee terms. Customs duty imposition also led to increase in gold smuggling but narrowed the trade deficit to permissible limit as the smuggled gold would not get accounted as imports in trade deficit calculations.
221:. The era of licensing was gradually dissolved. The gold market also benefited because the government abolished the 1962 Gold Control Act on 6 June 1990. by Finance Minister Madhu Dandvate and liberalized the gold import into India on payment of a duty of Rs.250 per ten grams. The government thought it more prudent to allow free imports and earn the taxes rather than to lose it all to unofficial channel. From official imports of practically nothing in 1991, India officially imported more than 110 tonnes of gold in 1992, which now stands about 800 tonnes in a year.
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India imports in excess of 1000 tons annually (including unofficially smuggled gold) with negligible local production. The annual gold imports are around 50 billion US$ next only to crude oil imports widening the trade deficit. In the years since 2001 to 2015, the official net gold imports are 269
231:
are also operating in India from March 2007. Alarmed by the excessive gold imports by
Indians despite the public holdings of gold is in excess of 30,000 metric tons, Indian Government introduced a new Gold Deposit Scheme with attractive benefits to the gold depositors in the year 2015 to recycle the
166:
to alarming levels. Devaluation of the Indian rupee also leads to steep rises in food commodity prices due to costlier petroleum products imports. In these circumstances, the gold import policy of India aimed at curbing the gold imports to a manageable level time to time by imposing taxes and legal
270:
pandemic as gold price shot up to 1788 US$ /ounce. Thus during the lower oil prices period, gold acts as crisis hedge to overcome the loss of revenue from oil exports to the oil exporting countries. When oil prices are higher, it acts as crisis hedge to the oil importing countries to dispose oil
287:
In India, when the agriculture production is good, it will lead to slump in the agriculture commodity prices and raise in gold price due to demand from rural areas. Similarly, when agriculture commodity prices raise due to less production, gold prices would depress by lack of demand from rural
216:
In 1990, India had a major foreign exchange problems and was on verge of default on external liabilities. The Indian
Government pledged 40 tons gold from their reserves with the Bank of England and avoided defaulting by securing a loan to recover. Subsequently, India embarked upon the path of
279:
in USA and the agreement of USA with OPEC to transact their international crude oil exports in US$ . However international gold price is fixed by the major gold importing countries like India as gold market is fully buyers market with global gold stocks amounting to 300 times of its annual
352:. This stashed money abroad is routed to India by importing gold (official channel or smuggled) which can be disposed off in to Indian rupees as gold commands insatiable demand from rural India. This multiple malpractices by importers and exporters artificially widen the official
311:
are squared off without actual delivery. India being the dominant importer of gold, Indian government can exercise full control on international gold trading when all its gold imports and recycled gold are channeled through it and distributed through the
224:
In
September 1999, the Govt. of India launched a Gold Deposit Scheme to utilize the idle gold and simultaneously give a return to gold owners and reduce the country's reliance on imports. However, this plan was not widely accepted by the population.
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by at least 3% points. The customs duty forgone during the financial year 2013-14 on non-essential gold and diamonds import is Rs 48,635 crores which is constituting 16% of the total customs duty forgone.
266:
can be exceeding 25 times far higher than long term average of 15 times. In April 2020, one ounce of gold fetched more than 90 barrels of WTI crude oil in USA in the mid of
205:
caste, who depended only on their traditional occupation of making gold ornaments, lost their business and their financial condition deteriorated and families shattered.
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stocks at profit and purchase gold with the accrued cash for replenishing oil stocks later during the lower oil price with respect to gold price. With the advent of
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available idling gold in the country for meeting internally the entire fresh ornamental gold demand. Government of India has nearly 550 tons of
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but crisis hedge. Some times, gold price apparently looks lower in US$ value but its price compared to corresponding crude
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307:, etc.) is of the order of 300 tons/day (nearly 110,000 tons/year) compared to 3,000 tons/year global production. However,
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The gold imports are also serving to channelise undeclared earnings by exporters and importers of India. Invariably,
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by three folds of the actual trade deficit subjecting Indian currency constantly at the risk of devaluation and
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780:
451:
300:
973:"Spike in customs duty on gold import triggers innovative ways of smuggling with people risking their necks"
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1179:
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production boom in USA, crude oil for the first time is being realistically priced in US$ irrespective of
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193:, the foreign exchange drain was accentuated in 1962 during the border dispute with China.
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484:"Comparative chart on Gold and Sensex, adjusted for inflation: From 1979-80 to 2011-12"
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1037:"Revenue foregone under the Central Tax System: Financial Years 2012-13 and 2013-14"
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exporters under invoice their exports whereas importers over invoice their imports
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in personal possession. High demand for gold in India with negligible indigenous
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Gold prices (US$ per troy ounce), in nominal US$ and inflation adjusted US$ .
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1199:
361:
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When the inflation adjusted gold value is examined, gold is not an inflation
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994:"Gold, Diamonds & Large Corporations; India's Biggest Tax Beneficiaries"
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868:"Consultation Paper on proposed framework for Gold Exchange in India, SEBI"
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208:
170:
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560:"In New Scheme, Rich Temples May Open Gold Vaults for PM Modi: Report"
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Gold trading daily turnover in the international commodity exchanges (
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30:
710:"The Untold Story Behind Saudi Arabia's 41-Year U.S. Debt Secret"
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results in gold imports, leading to drastic devaluation of the
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364:. It is estimated that unnecessary gold imports are retarding
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Two nations, two gold control acts. One worked, one didn’t
823:"China is one step closer to global gold-price domination"
623:"Deutsche Bank says gold's fair value is $ US750 an ounce"
119:
The Gold (Control) Repeal Act, 1990 (Act No. 18 of 1990)
16:
Act of the
Parliament of India, replaces Act 18 of 1965
730:
Erb, Claude B.; Harvey, Campbell R. (January 2013).
534:"A golden opportunity for India to correct the past"
376:
239:
952:"Import duty on gold jewellery hiked to 15 %"
581:"Gold is a "Crisis Hedge" not an Inflation hedge"
147:which was enacted to control sale and holding of
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1077:Major foreign holders of US treasury securities
760:"Why is gold falling, and where is it headed?"
236:which would help in kick starting the scheme.
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405:List of the largest trading partners of India
781:"Why Gold is Money: A Periodic Perspective"
1112:
1098:
931:"Gold bonds are way better than the metal"
910:"Which countries import Gold? (1995-2014)"
508:"Will gold duty hike encourage smuggling?"
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1241:Economic history of India (1947–present)
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58:An Act to regulate gold transactions.
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844:"Algorithmic gold trading (page 137)"
457:International Cyanide Management Code
1206:Acts of the Parliament of India 1968
689:"The Effects of Quantitative Easing"
647:"Which is Over Priced? Oil or Gold?"
429:List of countries by gold production
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1084:Re-Awakening of the Golden Triangle
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13:
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240:Crisis hedge not inflation hedge
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1064:Nilesh Shah (26 November 2012)
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335:Foreign Institutional Investors
254:Gold price history in 1960–2014
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602:"Gold can't be default option"
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452:List of gold mining disasters
362:international rating agencies
1211:Indira Gandhi administration
1015:"Gold imports - Social evil"
736:NBER Working Paper No. 18706
668:"Oil, Petrodollars and Gold"
212:Historical Gold price in INR
137:The Gold (Control) Act, 1968
24:The Gold (Control) Act, 1968
7:
1216:Repealed Indian legislation
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280:consumption or 53 times of
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802:"Daily turn over of gold"
410:Indian Currency Committee
333:billion US$ whereas the
199:Finance Minister of India
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889:"Gold demand by country"
366:growth of Indian economy
219:economic liberalization
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1150:Exploration licensing
419:London bullion market
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314:commodities exchanges
282:its annual production
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246:Gold as an investment
244:Further information:
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1170:Freight equalization
732:"The Golden Dilemma"
350:tax haven countries
277:quantitative easing
145:Parliament of India
39:Parliament of India
1246:1968 in Indian law
538:The Economic Times
424:World Gold Council
358:de-rating of India
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309:most of the trades
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77:Territorial extent
71:Act No. 45 of 1968
1236:Policies of India
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1120:Policies of India
512:Business Standard
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443:Kolar Gold Fields
191:Post-Independence
175:World gold output
159:and depletion of
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186:Gold Control Act
161:foreign exchange
98:1 September 1968
87:Assented to
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1058:Further reading
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745:10.3386/w18706
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514:. 4 April 2012
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540:. 2 June 2015
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1180:Agroforestry
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1065:
1044:. Retrieved
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1019:. Retrieved
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997:. Retrieved
988:
976:. Retrieved
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955:. Retrieved
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934:. Retrieved
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516:. Retrieved
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490:. Retrieved
478:
461:
400:BIS hallmark
387:Money portal
339:
331:
290:
286:
257:
227:
223:
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189:
157:Indian rupee
136:
135:
125:
90:12 June 2006
48:
18:
1145:Environment
1135:Electronics
852:22 December
715:17 November
694:17 November
346:black money
106:6 June 1990
1200:Categories
936:9 November
471:References
316:of India.
153:production
50:Long title
1175:Look East
1046:17 August
1021:17 August
999:17 August
978:17 August
957:17 August
915:17 August
894:17 August
652:17 August
586:17 August
344:to stash
273:shale oil
264:oil price
229:Gold ETFs
179:kilograms
95:Commenced
1155:Monetary
1070:Livemint
828:20 April
607:21 March
565:15 April
518:19 April
373:See also
268:Covid 19
164:reserves
129:Repealed
103:Repealed
67:Citation
1185:Science
807:31 July
786:17 July
765:31 July
673:19 July
631:31 July
492:31 July
197:, then-
143:of the
126:Status:
112:Repeals
1140:Energy
1042:. 2014
1017:. 2007
873:22 May
544:2 June
462:
1165:Water
1040:(PDF)
847:(PDF)
626:(PDF)
487:(PDF)
301:HKMEx
297:TOCOM
293:NYMEX
260:hedge
203:Sunar
81:India
1160:Visa
1130:Drug
1048:2014
1023:2014
1001:2014
980:2014
959:2014
938:2015
917:2015
896:2014
875:2021
854:2016
830:2016
809:2015
788:2019
767:2015
717:2015
696:2015
675:2016
654:2015
633:2015
609:2017
588:2015
567:2015
546:2015
520:2013
494:2015
305:DGCX
177:(in
149:gold
740:doi
360:by
348:in
141:Act
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181:)
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