Budget proposals pertaining to gold and jewellery segments have received divergent response from merchants and bankers in the State. While certain gold merchants expressed apprehensions about the success of the new gold monetisation scheme, others welcomed it.
The gold monetisation scheme may not serve the intended purpose, said Girirajan, patron of the All Kerala Gold and Silver Merchants Association. The scheme is unlikely to make a major impact in the market in Kerala, he told The Hindu .
In Kerala, most people buy gold in physical form with a view to making use of it in times of emergency. Even though government agencies have been discouraging people from extravagance and spending on gold for purposes of marriage ceremonies, people have been buying gold ornaments for weddings, he pointed out.
The ornaments acquired by families are generally kept in bank lockers, but deployed for purposes such as buying houses or to meet hospital expenses in times of need. The proposed scheme will be of little avail for such people. “Buying considerable quantity of gold ornaments is a question of status for most people belonging to the middle classes. Investing in gold for non-marriage purposes is often a practice identified in north India,” he said.
Indian gold coin
As regards the proposal to develop an Indian gold coin, Mr. Girirajan felt that banks used to sell coins on a similar manner and as such, a radical change in investment pattern was not envisaged. The government should have reduced the duty on import of gold from the present 10 per cent, a pending demand of gold merchants. Smuggling has been rampant because of the high import duty, he said.
Presenting a different view, George Alexander Muthoot, Managing Director, Muthoot Finance, welcomed the announcement on the gold monetisation scheme. “Gold loan non-banking finance companies are already doing gold monetisation through gold loans being disbursed on the basis of gold collaterals. It is also a good decision to print gold coins in India with Ashoka emblem,” he said, adding that it might reduce the craze for imported gold coins and could become a symbol of patriotism.
T.S. Kalyanaraman, Chairman & Managing Director, Kalyan Jewellers, said the gold monetisation scheme is an encouraging initiative which will help convert the physical asset to a liquid financial asset, according to him.
‘Scheme unlikely to make a major impact in Kerala’
‘Will help convert physical asset to liquid asset’
