Hallmarking gold

If there is one item of mass consumption where third-party quality assurance is vital, it is without doubt gold. Unfortunately, the infrastructure for providing such a guarantee through the assaying and hallmarking of gold is hopelessly inadequate.

India is one of the world's largest consumers of gold and cheating at the retail level is rampant. Notably, of the country's annual gold consumption of a massive 800 tonnes, as much as 80 per cent goes into jewellery fabrication for sale in the domestic and export markets.

Most surveys, including those commissioned by the consumer affairs department, have borne out the impression that much of the jewellery palmed off on unwary consumers as being of 22 carats purity is actually of far lower quality.

In the case of jewellery exporters, quality marketing is all the more necessary and they have to go to gold assaying and hallmarking centres in the UK for this purpose.

Under the circumstances, it seems appropriate for the government to intervene through a centrally sponsored scheme for facilitating the setting up of gold hallmarking centres in each of the country's 602 districts over the next three years.

Equally welcome is the move to become a member of the Vienna convention on control and stamping of articles of precious metals. This would lend global recognition to India's gold hallmarking, obviating the need for exporters to go to other countries for quality certification.

More significantly, this measure would help India to substantially raise its share in the world jewellery market. A possible upshot of the gold hallmarking could be the use of quality stamped gold as collateral for bank loans to the general public. The consumer affairs department is said to be discussing the issue with banks.

The success of this move depends crucially on how well the proposed scheme is implemented. Scepticism crops up because of the record of making slow progress in opening hallmarking centres and because of the costs involved in this venture.

Though the government introduced gold hallmarking by centres recognised by the Bureau of Indian Standards (BIS) in 2000, only 24 such centres have got recognised in five years. These, too, are located in a handful of big cities. The installation of assaying and hallmarking facilities is a fairly costly proposition.

Even though the government proposes to offer some financial assistance for putting up these centres, the task is unlikely to be accomplished without substantial private investment. For, though the government had sought an allocation of Rs 421 crore from the Planning Commission to provide financial assistance for these centres, the actual allocation for the current year has been a token sum of Rs 1 crore.

If the government does not have the money, it should open up this field for private investment, domestic and foreign, so that the required infrastructure can be put in place within the stipulated time frame.