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W16170

THE ECONOMICS OF GOLD: INDIA’S CHALLENGE IN 20131

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Professors Rajesh Panda and Madhvi Sethi wrote this case solely to provide material for class discussion. The authors do not intend
to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the

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permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-03-30

On June 13, 2013, Indiatimes.com, an Indian online news portal, reported on a press conference at which
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India’s finance minister, Palaniappan Chidambaram, urged Indians to refrain from buying gold:

[T]he Indian finance minister asked people to resist the temptation of buying gold for the sake of
the health of the Indian economy. “I once again appeal to everyone to resist the temptation to buy
gold. This will show positive impact on every aspect of Indian economy,” he said, addressing a
news conference. According to Mr. Chidambaram, it is wrong to say that gold is “the safest
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investment” option. “It is wrong to say that there aren’t other attractive investment instruments,”
he said. “People who are financially well informed should put their investments in other financial
instruments,” he added. “How do we sustain? How can we finance these gold imports?” he asked,
while hoping that “a day will come when we regard gold as any other metal, it just shines a little
more than copper or bronze.”2

In the October–December quarter of fiscal year 2012/13, India was facing a huge economic challenge. Its
current account deficit had hit a record high of 6.7 per cent of its gross domestic product (GDP).3 This
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increase was attributed to rising gold imports and was a major cause of concern for the Indian finance
minister and the governor of the Reserve Bank of India (RBI), India’s central bank. This crisis raised some
questions that had come up before: Why was gold such an obsession in India? Why was it seen as a good
investment? How could the country’s financial leaders address this situation?

INDIA AND GOLD — A LONG JOURNEY TOGETHER

India’s cultural fascination with gold could be traced back to Hindu4 mythology. According to ancient
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Hindu texts, Lord Brahma,5 the creator of the universe, emerged from a golden egg. Many references to the
yellow metal were also found in ancient Vedic literature.6 For millennia, gold had been an integral part of
the Hindu cultural fabric and inseparable from its traditional belief system. Numerous rituals and customs
involved gold. Festivals such as Dhanteras7 and Akshaya Tritiya8 revolved around the metal, which was
seen as a symbol of purity, prosperity, and good fortune. Such occasions were considered auspicious days
to purchase gold.9 Hindus celebrated these festivals with great fervour and flocked to jewellery stores at

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 Page 2 9B16N009

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these times, fuelling the demand for gold. Hindus bought gold as a gift for virtually every special occasion

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(e.g., weddings, birthdays, or festivals) and as a religious offering.

In the past, gold was used as the common medium of exchange across the monetary systems of different
kingdoms and dynasties that ruled the Indian subcontinent. Huge reserves of gold were maintained by kings
as a hedge against economic calamity caused by wars or political turbulence. People believed that gold was

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the only means to preserve wealth, and many preferred it as a form of savings.10

Many of these beliefs persisted in modern India. Indians considered gold a safe investment option. In rural
India, for example, where the reach of the banking system was limited,11 gold jewellery continued to form
a substantial part of people’s investments. A large proportion of Indian families borrowed against gold to
meet their short-term financial needs. In these ways, gold was integral to Indian society and to family life.12

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The great demand for gold in India could be attributed not only to social and religious reasons but also to
economic reasons. Despite the increasing price of gold over the years, the demand for it in India had
continued to rise, and this was no different in 2013. However, the country’s insatiable demand for gold
began to receive new and significant attention from policy makers.

DEMAND AND SUPPLY OF GOLD: THE WORLD AND INDIA13

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The demand for gold across the world principally arose from three sources: jewellery, industrial use, and
investment (both government and retail investment). In 2013, jewellery was responsible for 52 per cent of
global gold demand, retail investment accounted for 39 per cent, and industrial use accounted for the
remaining 9 per cent (see Exhibit 1). In India, jewellery contributed 62 per cent of the total demand, retail
investment accounted for 37 per cent, and industrial use accounted for just 1 per cent. Although India
produced less than 1 per cent of the world’s gold, it accounted for more than 21 per cent of global gold
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consumption in 2013, which was supplied mainly through imports.

The gold jewellery market was driven by demand from developing countries such as China (37 per cent),
India (26 per cent), Turkey (4 per cent), and Russia (2 per cent). China and India together contributed more
than 63 per cent of the global jewellery demand. The United States, which accounted for 25 per cent of the
global GDP, was responsible for only 3 per cent of the global jewellery demand.
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The global physical demand for gold increased by 34 per cent from 2004 to 2013, whereas the physical
demand for gold in India increased by more than 40 per cent in the same period. In addition to jewellery,
the demand for bars and coins also increased substantially during this period, indicating that Indians were
choosing gold as a secure investment alternative.

GOLD AS AN INVESTMENT OPTION IN INDIA

Indian investors could choose among several investment alternatives. Broadly, these could be categorized
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as tangible assets and intangible assets. Tangible assets included assets such as gold, silver, real estate, etc.,
while intangible assets included financial assets such as stocks, bonds, etc. The percentage returns14 of
selected investment alternatives15 compared with gold returns and inflation provided a glimpse of the
performance of various tangible and intangible assets (see Exhibit 2).

Gold, as an investment, outperformed safe investments such as government bonds and bank deposits (see
Exhibit 3).16 Many Indian investors believed that gold was an excellent inflationary hedge. This belief was

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 Page 3 9B16N009

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justified by the fact that the rise in gold prices in India had, on an average, beaten inflation by a large margin

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for the last 30 years. However, the return on gold in the international market had not been as lucrative at
only 5.61 per cent on average for a 30-year horizon, compared to 10.60 per cent in rupee terms. Gold
returns, as it was commonly understood, were a function of gold prices.

After World War II, the price of gold was fixed at US$35 an ounce at the Bretton Woods Conference.17

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This system lasted until 1970, after which, gold was traded freely in the open market. Prices were
determined by global demand and supply. Gold production in 2013 was estimated at 4,302 tonnes, of which
more than 70 per cent was supplied by fresh mine production. China, Australia, Russia, and United States
were the major producers of gold in 2013.18 The price of gold varied across different regions depending on
each region’s import costs and applicable taxes. Gold prices in India increased exponentially in the 40 years
leading up to 2013 (see Exhibit 4),19 but that had not been the case with gold prices in dollar terms. (The
rupee dollar exchange rates are provided in Exhibit 5.)

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The increase in gold prices in India over the years had led to the demand for gold as an investment option.
However, the lack of a proportionate domestic supply resulted in ever increasing gold imports.

GOLD AND TRADE IMBALANCE

India had had a huge trade deficit for years (see Exhibit 6).20 Its current account deficit was lower than its
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trade deficit because of net positive invisible trade. Historically, gold imports had contributed significantly
to the rising current account deficit. In 2013, the contribution of gold imports to the widening current
account deficit was very high. This situation commanded the attention of the country’s finance minister and
the RBI governor, and, in a bid to control gold imports, the government increased the import duty on gold
from 4 per cent to 15 per cent in 2013. The central bank and the government took the following steps that
year:21
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January 21: The government raised the gold import duty from 4 to 6 per cent.
January 22: The government more than doubled the duty on raw gold to 5 per cent.
May 3: The RBI restricted the import of gold on a consignment basis by banks.
June 5: The government raised the gold import duty further, to 8 per cent.
August 13: The government hiked the import duty on gold for a third time in 2013, to 10 per cent.
September 17: The government increased the import duty on gold jewellery again, to 15 per cent.22
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EXHIBIT 1: GOLD DEMAND AND SUPPLY

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(a) WORLD GOLD SUPPLY AND DEMAND
(In tonnes) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Supply
Mine Production 2,504 2,561 2,496 2,499 2,430 2,613 2,741 2,839 2,861 3,022
Scrap 881 902 1,132 1,005 1,350 1,726 1,711 1,659 1,634 1,280

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Total Supply 3,385 3,463 3,628 3,504 3,780 4,339 4,452 4,498 4,495 4,302
Demand
Jewellery 2,619 2,721 2,302 2,425 2,306 1,817 2,034 2,029 1,998 2,361
Industrial Fabrication 418 440 471 477 464 414 469 458 415 409
...of which electronic 266 286 316 322 311 275 326 320 284 279
...of which dental &
medical 68 62 61 58 56 53 48 43 39 36

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...of which other
industrial 85 92 95 98 97 87 95 95 92 93
Retail Investment 361 412 427 442 915 825 1,229 1,569 1,357 1,778
...of which bars 215 263 238 238 654 536 935 1,242 1,036 1,377
...of which coins 146 148 189 204 261 289 295 327 321 401
Physical Demand
(excluding net
official sector and
ETF inventory
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build) 3,398 3,573 3,200 3,344 3,685 3,056 3,732 4,056 3,770 4,548
(b) INDIA GOLD SUPPLY AND DEMAND
(In tonnes) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Supply
Mine Production 3.5 3 2.5 2.9 2.6 2.1 2.8 2.3 1.7 2
Scrap 107 94 80 73 89.5 115.5 81 58.5 113 100.8
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Total Domestic
Supply 110.5 97 82.5 75.9 92.1 117.6 83.8 60.8 114.7 102.8
Imports 592 748 753 862 760 779 1,123 1,208 1,071 962
Demand
Jewellery 572 634 551 595 623 503 685 667 618 607
Industrial Fabrication 24.6 28.4 27.1 25 21.4 14.1 15.8 14 11.5 12.1
...of which electronic 2.00 2.20 2.60 2.50 2.10 1.90 2.60 2.50 2.40 2.40
...of which dental &
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medical
...of which other
industrial 22.60 26.20 24.50 22.50 19.30 12.20 13.20 11.50 9.10 9.70
Retail Investment 101 136 196 213 223 171 349 368 312 362
...of which bars 76.2 102.8 139.8 148.6 159.9 117.5 266.3 288 205.9 265.8
...of which coins 24.3 32.8 55.8 64.7 63.5 53.5 82.6 80 106.3 96.3
Physical Demand
(excluding net
official sector and
ETF inventory build) 697.3 798 773.6 833 868 688.5 1049.7 1049 941.9 981.6
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Source: Compiled by case authors based on data from “Thomson Reuters GFMS Annual Surveys, Gold Survey 2014,”
accessed June 4, 2014, https://forms.thomsonreuters.com/gfms.

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EXHIBIT 2: COMPARISON OF RETURNS OF SELECTED INVESTMENT ALTERNATIVES AND

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INFLATION IN INDIA FROM 1970/71 TO 2012/2013
Interest Rates —
Commercial Bank Central Government CNX Nifty
Year
Deposit Rates Securities (weighted YOY returns Gold Returns Gold Returns
(above 5 years) average) Inflation (%) (%) in ₹ (%) In US$ (%)
1970/71 7.25

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1971/72 7.25 8.22 16.84
1972/73 7.25 21.19 50.80
1973/74 7.25 52.26 78.49
1974/75 9.00 40.58 43.71
1975/76 10.00 5.01 -10.15
1976/77 10.00 0.85 -15.29
1977/78 9.00 16.03 24.42
1978/79 9.00 24.03 32.20

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1979/80 10.00 46.45 94.62
1980/81 10.00 7.03 11.37 31.39 44.29
1981/82 10.00 7.29 13.12 12.92 -28.03
1982/83 11.00 8.36 7.89 0.20 -4.64
1983/84 11.00 9.29 11.87 7.89 0.68
1984/85 11.00 9.98 8.32 6.75 -15.87
1985/86 11.00 11.08 5.56 7.13 -3.61
1986/87 11.00 11.38 8.73 9.32 16.96
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1987/88 10.00 11.25 8.80 32.66 19.70
1988/89 10.00 11.40 9.38 3.01 -8.03
1989/90 10.00 11.49 3.26 1.70 -8.82
1990/91 11.00 11.41 8.97 6.88 -2.64
1991/92 13.00 11.78 13.87 24.51 -4.60
1992/93 11.00 12.46 11.79 -48.22 -4.51 -5.33
1993/94 10.00 12.63 6.36 75.33 10.43 10.36
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1994/95 11.00 11.90 10.21 -16.25 2.99 2.51

1995/96 13.00 13.75 10.22 -2.00 6.22 1.72
1996/97 12.50 13.69 8.98 -2.66 2.28 -3.55
1997/98 12.00 12.01 7.16 15.13 -14.27 -15.60
1998/99 11.50 11.86 13.23 -6.26 -1.82 -7.77
1999/00 10.50 11.77 4.67 43.73 2.94 -4.34
2000/01 10.00 10.95 4.01 -25.19 1.82 -2.69
2001/02 8.50 9.44 3.78 -0.75 2.36 2.06
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2002/03 6.25 7.34 4.30 -14.11 16.45 17.19

2003/04 5.50 5.71 3.81 80.02 7.25 16.02
2004/05 6.25 6.11 3.77 11.87 7.46 9.61
2005/06 7.00 7.34 4.25 64.56 12.29 15.13
2006/07 8.50 7.89 5.80 10.03 33.91 31.86
2007/08 9.00 8.12 6.37 30.30 8.17 21.86
2008/09 8.50 7.69 8.35 -36.26 28.95 13.24
2009/10 7.75 7.23 10.88 71.52 22.24 17.97
2010/11 8.75 7.92 11.99 10.27 22.03 26.44
2011/12 9.25 8.52 8.86 -9.11 33.78 27.16
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2012/13 9.00 8.36 9.31 6.86 17.27 0.53

Source: Calculated by case authors using data from “UNCTAD Stat Database (2014), Consumer Price Indices,” 1980-2014,
http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx; “Database on Indian Economy, RBI’s Data Warehouse,”
2014, Structure of Interest Rates, http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics; “Database on Indian Economy, RBI’s Data
Warehouse, 2014, Gold and Silver - Yearly Average Price in Domestic and Foreign Markets, http://dbie.rbi.org.in/DBIE/
dbie.rbi?site=statistics; “Database on Indian Economy, RBI’s Data Warehouse,” 2014, Annual Averages of Share Price Indices
and Market Capitalisation, http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics; all websites accessed June 4, 2014.

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EXHIBIT 3: MEAN AND STANDARD DEVIATION OF SELECTED INVESTMENT ALTERNATIVES IN

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INDIA OVER A PERIOD OF TIME

Commercial Interest Rates Gold

Bank — Central CNX Nifty Gold Returns
Deposit Government Inflation YOY returns Returns in US$
Rates (%) Securities (%) (%) % in ₹ (%) (%)

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5 years mean 8.65 7.94 9.88 8.66 24.85 17.07
Standard deviation 0.58 0.52 39.66 6.50 10.94
10 years mean 7.95 7.49 7.34 24.01 19.33 17.98
Standard deviation 1.29 0.93 37.47 10.51 9.27
15 years mean 8.42 8.42 6.89 15.83 14.34 12.29
Standard deviation 1.65 1.85 35.28 11.77 12.33
20 years mean 9.24 9.51 7.32 15.35 11.14 8.99

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Standard deviation 2.11 2.55 34.52 12.37 12.88
25 years mean 9.59 9.95 7.74 10.17 6.01
Standard deviation 2.07 2.44 12.05 13.01
30 years mean 9.79 10.06 7.90 10.60 5.61
Standard deviation 1.95 2.26 11.76 13.08

Source: Calculated by case authors based on “UNCTAD Stat Database (2014), Consumer Price Indices,” 1980-2014,
http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx; “Database on Indian Economy, RBI’s Data Warehouse,”
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2014, Structure of Interest Rates, http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics; “Database on Indian Economy, RBI’s Data
Warehouse,” 2014, Gold and Silver — Yearly Average Price in Domestic and Foreign Markets,
http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics; “Database on Indian Economy, RBI’s Data Warehouse,” 2014, Annual
Averages of Share Price Indices and Market Capitalisation, http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics; all websites
accessed June 4, 2014.
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EXHIBIT 4: GOLD PRICES (1970–2014)

NATIONAL CURRENCY UNIT PER TROY OUNCE

₹ US$ per 10 1992/93 4,103.66 108.78

Year per 10 grams grams 1993/94 4,531.87 120.06
1970/71 184.96 11.83 1994/95 4,667.24 123.07
1971/72 200.16 13.83 1995/96 4,957.60 125.18
1972/73 242.57 20.85 1996/97 5,070.71 120.73
1973/74 369.33 37.22 1997/98 4,347.07 101.90
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1974/75 519.19 53.49 1998/99 4,268.17 93.98

1975/76 545.21 48.06 1999/00 4,393.56 89.91
1976/77 549.82 40.72 2000/01 4,473.60 87.49
1977/78 637.93 50.66 2001/02 4,579.12 89.29
1978/79 791.22 66.97 2002/03 5,332.36 104.65
1979/80 1,158.75 130.33 2003/04 5,718.95 121.42
1980/81 1,522.44 188.06 2004/05 6,145.38 133.09
1981/82 1,719.17 135.34 2005/06 6,900.56 153.22
1982/83 1,722.54 129.06 2006/07 9,240.32 202.04
1983/84 1,858.47 129.94 2007/08 9,995.62 246.21
1984/85 1,983.92 109.32 2008/09 12,889.74 278.81
1985/86 2,125.47 105.37 2009/10 15,756.09 328.91
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1986/87 2,323.49 123.24 2010/11 19,227.08 415.88

1987/88 3,082.43 147.52 2011/12 25,722.42 528.84
1988/89 3,175.22 135.68 2012/13 30,163.93 531.61
1989/90 3,229.33 123.71 2013/14 29,190.39 426.54
1990/91 3,451.52 120.45
1991/92 4,297.63 114.91
Source: “Database on Indian Economy, RBI’s Data Warehouse,” 2014, Gold and Silver — Yearly Average Price in Domestic
and Foreign Markets, accessed June 4, 2014, http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics.

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EXHIBIT 5: ₹ TO $US EXCHANGE RATE

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Year Rupee per US$ Year Rupee per US$
1970/71 7.56 1993/94 31.37
1971/72 7.47 1994/95 31.40
1972/73 7.68 1995/96 33.45
1973/74 7.79 1996/97 35.50
1974/75 7.94 1997/98 37.16

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1975/76 8.68 1998/99 42.07
1976/77 8.98 1999/00 43.33
1977/78 8.59 2000/01 45.68
1978/79 8.23 2001/02 47.69
1979/80 8.10 2002/03 48.40
1980/81 7.91 2003/04 45.95
1981/82 8.97 2004/05 44.93
1982/83 9.67 2005/06 44.27
1983/84 10.34 2006/07 45.25

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1984/85 11.89 2007/08 40.26
1985/86 12.23 2008/09 45.99
1986/87 12.78 2009/10 47.44
1987/88 12.97 2010/11 45.56
1988/89 14.48 2011/12 47.92
1989/90 16.65 2012/13 54.41
1990/91 17.94 2013 (up to
1991/92 24.47 May 2013) 58.15
1992/93 30.65
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Source: “Database on Indian Economy, RBI’s Data Warehouse,” 2014, Monthly Average Forex Rates, accessed June 4, 2014,
http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics.

EXHIBIT 6: SELECTED TRADE DATA FOR INDIA

(₹ Billion)
III.
B) I. Trade II.
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A) Merchandise Current Gold

Year / Item Merchandise Balance Invisibles,
Exports, f.o.b. Account Imports
Imports, c.i.f. (A-B) net
(I+II)
1999/00 1,627.53 2,401.12 -773.59 570.28 -203.31 179.91
2000/01 2,078.52 2,645.89 -567.37 451.39 -115.98 188.29
2001/02 2,133.45 2,683.00 -549.55 713.81 164.26 198.89
2002/03 2,600.79 3,117.76 -516.97 823.57 306.60 186.08
2003/04 3,039.15 3,673.01 -633.86 1,273.69 639.83 299.46
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2004/05 3,817.85 5,335.50 -1,517.65 1,395.91 -121.74 473.48

2005/06 4,657.48 6,954.12 -2,296.64 1,859.27 -437.37 479.51
2006/07 5,828.71 8,628.33 -2,799.62 2,355.79 -443.83 654.40
2007/08 6,680.08 10,356.73 -3,676.64 3,041.86 -634.78 673.30
2008/09 8,579.00 14,054.00 -5,475.00 4,198.00 -1,276.00 953.24
2009/10 8,633.00 14,232.00 -5,599.00 3,803.00 -1,797.00 1,358.78
2010/11 11,657.00 17,461.00 -5,805.00 3,608.00 -2,197.00 1,847.42
2011/12 14,825.00 23,946.00 -9,121.00 5,362.00 -3,760.00 2,699.01
2012/13 16,677.00 27,321.00 -10,645.00 5,848.00 -4,796.00 2,921.49
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Source: “Database on Indian Economy, RBI’s Data Warehouse,” 2014, International Trade, accessed June 4, 2014,
http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics.

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ENDNOTES

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1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of institutions or individuals mentioned in the case.
2
“Don’t Buy Gold for Economy’s Sake: Chidambaram Tells Indians,” Indiatimes, June 13, 2013, accessed June 4, 2014,
www.indiatimes.com/news/india/dont-buy-gold-for-economys-sake-chidambaram-tells-indians-83052.html.
3
“Current Account Deficit Hits Record High of 6.7% in Q3,” Zeenews India, March 28, 2013, accessed June 4, 2014,
http://zeenews.india.com/business/news/economy/current-account-deficit-hits-record-high-of-6-7-in-q3_73060.html.

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4
Hindus constitute 80.5% of the Indian population as per census 2001 data. The Registrar General & Census Commissioner,
India, “Religious Composition,” Government of India, 2010/11, accessed June 4, 2014,
www.censusindia.gov.in/Census_Data_2001/India_at_glance/religion.aspx.
5
Mark Cartwright, “Brahma,” Ancient History Encyclopedia, accessed June 4, 2014, www.ancient.eu/Brahma/ and
www.britannica.com/topic/Brahma-Hindu-god.
6
The Vedas are a collection of texts that originated in ancient India. These are the oldest scriptures of Hinduism. Cristian
Violatti, “The Vedas,” Ancient History Encyclopedia, January 18, 2013, accessed June 4, 2014, www.ancient.eu/The_Vedas/.
7
On Dhanteras, Lakshmi, the goddess of wealth, is worshipped to provide prosperity and wellbeing. World Gold Council,
“India’s Jewellery Market,” World Gold Council, 2015, accessed June 4, 2014, www.gold.org/jewellery/india-market.

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8
Considered one of the most auspicious days in the Hindu calendar, it is believed that any activity started on this day will be
fruitful. “India’s Jewellery Market,” World Gold Council, 2015, accessed June 4, 2014, www.gold.org/jewellery/india-market.
9
Shyam Balasubramanian, “There Is a Deeper Meaning to Akshaya Tritiya than Just Gold,” The New Indian Express, May
13, 2013, accessed June 4, 2014, www.newindianexpress.com/cities/chennai/There-is-a-deeper-meaning-to-Akshaya-Tritiya-
than-just-gold/2013/05/13/article1587534.ece.
10
Jeni Branson, “A Study on Saving Habits of Households in Gold Ornaments in India,” Asia Pacific Journal of Research 1,
no. 12 (April 2014): pp. 28-35.
11
More comprehensive information is available in Pradhan Narayan Chandra, “Persistence of Informal Credit in Rural India:
Evidence from ‘All-India Debt and Investment Survey’ and Beyond,” May 2013, RBI working paper.
op
https://www.rbi.org.in/scripts/PublicationsView.aspx?id=14986.
12
“India: Heart of Gold Revival,” World Gold Council Report, November 2010, accessed June 4, 2014,
https://www.gold.org/research/india-heart-gold-revival
13
“GFMS Gold Survey 2014,” Thomson Reuters, April 2014, https://forms.thomsonreuters.com/gfms/.
14
Reserve Bank of India Data Warehouse, National Stock Exchange and UNCTAD STAT database. Returns are calculated
using prices of the financial assets. Accessed June 4, 2014, http://unctadstat.unctad.org/wds/ReportFolders/
reportFolders.aspx and http://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics.
15
The selected investment alternatives include Commercial Bank Deposit (above five years), Central Government Securities,
tC

CNX Nifty (National Stock Exchange’s Benchmark Index), and Gold

16
Reserve Bank of India Data Warehouse, op. cit.; P.F., “Why Do Indians Love Gold?” The Economist, November 20, 2013,
accessed June 4, 2014, www.economist.com/blogs/economist-explains/2013/11/economist-explains-11.
17
“Gold as Money,” World Gold Council, 2015, accessed June 4, 2014, www.gold.org/history-and-facts/gold-money.
18
“GFMS Gold Survey 2014,” op. cit.
19
Reserve Bank of India Data Warehouse, op. cit.
20
Ibid.
21
Siddesh Mayenkar, “Timeline — India’s Efforts to Curb Gold Imports,” Reuters, August 19, 2013, accessed June, 4, 2014,
http://in.reuters.com/article/2013/08/19/india-gold-timeline-idINDEE97I08O20130819.
22
PTI, “Import Duty on Gold Jewellery Hiked to 15%,” The Hindu, September 18, 2013, accessed June 4, 2014,
No

www.thehindu.com/business/Industry/import-duty-on-gold-jewellery-hiked-to-15/article5138304.ece.
Do

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