India "Importing As Much Gold as Possible" Ahead of Proposed Restrictions

GOLD BULLION imports to India rose 138% in April from March, the Ministry of Commerce and Industry said Monday, driving the country's overall trade deficit sharply wider as domestic dealers used the fastest price-drop in 30 years to restock ahead of today's key gold-buying festival, Akshaya Tritiya.

Widely observed across southern states such as Kerala, the spring festival is marked by both Hindu and Jain calendars as an auspicious day for new ventures and investments.

Current price levels – down 7% from gold bullion's record Rupee high of December 2012 – could attract half-as-much buying again as last year's festival, reckons Prithviraj Kothari, previously head of the Bombay Bullion Association and managing director of Riddisiddhi Bullions, speaking to Bloomberg.

Despite rising more than 70% from March, however, last month's trade deficit was barely half the size of October's record gap according to official data.

Home to the world's largest consumers of physical gold, India has seen various import tariffs and other measured imposed by government since early 2012 in a bid to curb gold bullion imports.

India has next to no domestic gold mining output. Coming amid the spring wedding season – when gift-giving traditionally centers on gold jewelry – Akshaya Tritiya is the second strongest festival for gold demand behind the Diwali festival of lights in November.

Whilst household demand for gold jewelry has risen in response to April's price crash, money managers haven't extended their exposure to exchange-traded gold funds. According to Bloomberg data, India's gold E.T.F.s shrank nearly 9% by value last month to less than $2 billion.

"Gold is an integral part of our lives in India," says an article at NDTV from personal finance company ArthaYantra. But "it is an investment that does not add much value to the productive capacity of the economy," the firm goes on, echoing the view of government ministers seeking to curb India's gold bullion imports to reduce the trade deficit.

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