Consumption of the metal in the countryside may be affected due to poor kharif.
Deficient rain in the current season may have a major bearing on gold consumption in India, the world’s largest consumer of the yellow metal.
Since rural consumers’ buying strength entirely depends on their agricultural income, a sedate rural economy (agronomy) this year may adversely impact gold buying.
Rural gold consumption, which constitutes about 65 per cent of the country’s demand for the yellow metal, may be badly affected.
According to an estimate of the agricultural ministry, there may be a 5 per cent decline in kharif output, which would mean a loss of around Rs 28,000 crore in rice, groundnut, cane and pulses output.
Another estimate has put the decline in rice output at 10 per cent, meaning a loss of 8-9 million tonnes valued at Rs 10,000 crore at a conservative level.
More From This Section
Later, the finance minister announced that kharif sowing could be 20 per cent lower than last year on an estimated 26 per cent decline in rainfall as on August 19. A major decline is seen in rice acreage at 22 per cent compared with a fall of only 2-10 per cent for sugarcane, pulses and oilseeds.
Worried over an anticipated shortfall of gold consumption during the rest of the current calendar year, World Gold Council (WGC) is organising a month-long trade-cum-exhibition in five prime cities simultaneously to attract customers.
The exhibition titled as “The Great Indian Gold Rush” is being organised from September 19 in Mumbai, Delhi, Bangalore, Kolkata and Ahmedabad in association with local jewellers.
According to sources, the council has also decided to award regular customers with a total prize money of Rs 2.2 crore.
“Gold sales in urban India, constituting roughly 35 per cent of the total consumption in the country, are likely to rise on promotional efforts by WGC and other similar bodies, including Gems & Jewellery Exports Promotion Council (GJEPC), Gems and Jewellery Federation (GJF). However, a rise in urban sales may not be adequate to compensate the downfall in rural consumption,” said Ajay Mitra, managing director (Indian sub-continent), WGC.
Citing an example of Indian consumers’ passion for gold, Mitra said that even at sustained high prices, traders inked major deals at the recently-concluded India International Jewellery Show in Mumbai.
“We have never seen such enthusiasm among traders earlier, which means that customers are willing to invest in gold irrespective of high prices,” Mitra added.
In the second quarter, the country’s gold consumption bounced back at 109 tonnes as against a paltry 17.7 tonnes in the first quarter. Though compared with the second quarter last year, it declined by 38 per cent.
Meanwhile, gold prices continued to rule over Rs 14,500 per 10 gm during the last three months discouraging customers from fresh booking. Both consumers and wholesalers appear to be waiting on the sidelines for more sizeable dips to provide a more attractive buying opportunity.