 "Women buy gold ornaments on the occasion of Dhanteras festival at a shop in Amritsar")
Gold price in the country is unlikely to come down in the near future, even as the growth prospects of the auto industry depend on corrective measures, group chief economic advisor of SBI Soumya Kanti Ghosh said on Tuesday.
Speaking at a programme organised here by the Institute for Advanced Studies in Complex Choices (IASCC), Ghosh said the financial sector and the corporate sector today face the twin challenge of credibility and resilience.
Further, he said, the possibility of military conflict in the Straits of Hormuz, Korean peninsula and Taiwan does not hold anything positive for the global economy, particularly for India. No wonder the price of gold has continued its rapid northward movement during the last six months.
Going forward, it looks unlikely the gold prices would correct anytime soon, he said.
The prices were ruling at around Rs 39,000 per 10 gram on this Dhanteras, as against Rs 32,690 per 10 gram on the same day in 2018.
Gold on Tuesday rose by Rs 328 to Rs 39,028 per 10 gram, according to HDFC Securities.
The civil strife in many countries raises the risk of humanitarian costs, migrations strains in neighbouring countries and together with geopolitical tensions, high volatility in commodity markets, Ghosh said.
The SBI advisor said the domestic economy this time has not been completely shielded and there was visible slowdown in the growth.
According to him, many countries, including India, have witnessed 22 to 716 basis point decline in growth between June 18 and June 19.
The steep drop in auto sales has been a leading indicator of what can be expected in the coming quarters. The growth prospects are tilted towards negative side unless a course correction is made, he said.
This outlook was reinforced despite the fairly well- received union budget and subsequent policy announcements, he said about the auto sector.
Ghosh said as per a study conducted by the SBI, car sales are income-agnostic across regions, age and gender.
More and more car buyers, everybody and everywhere are going for a high-end cars costing more than Rs 10 lakh, he said.
Most interestingly, a number of women buyers of car is on the rise aligning with the rising number of women workforce in India, he said.
He said although the monsoon has been above normal and water situation improved in many parts of the country, the delay in sowing and lower acreage may dent the purchasing power thus slowing the economy further.
