NEW DELHI — He wears a badge, and his slightly wrinkled light blue uniform has epaulettes. But the security guard casually seated on a chair at the entrance to this jewelry store in a New Delhi mall, old gun in hand, doesn’t exactly look like the deterrent type.
In the shop window, display busts have their necks draped with golden and silver necklaces, some with diamonds. Inside the shop, a succession of glass counters, each filled with more sparkling pieces than the next, leads to the office of owner Ramesh Narang, who wears a formal pink handkerchief in his jacket.
Narang is not just a jeweler. He’s also a patriot. “We’re ready to help the nation,” he says cheekily. Although selling gold is how he earns a living, he admits that it has now become a dangerous threat to the Indian economy, and he and other Indian jewelers have committed not to sell gold in certain forms so as not to exacerbate the situation.
The massive imports of gold — a direct consequence of the Indian hunger for the yellow metal — have indeed put a heavy strain on the country’s commercial balance. While the rupee is crumbling amid economic slowdown, the government spares no efforts to try and curb its citizens’ appetite for gold.
The latest export figures, which were published at the beginning of the month, are encouraging. In September, gold imports fell 82% compared with the previous year. Officials admit, however, that the situation is still uncertain. New Delhi desperately needs Narang’s patriotism. At the end of the 2000s, India imported 1,000 tons every year, representing one-third of global imports.
This frenzy has a high price tag: In 2010-2011, $40 billion was spent buying gold from abroad, which represents 10% of the country’s total imports. Therefore, when the rupee started to weaken dramatically in 2012, the authorities sounded the alarm and developed a new plan: keep savings away from “unproductive” investments — said Finance Minister Palaniappan Chidambaram — and direct it toward financial products that support the economy. Customs duties on imported gold bars were thus multiplied by five, going gradually from 2% to reach 10% during the summer.
To participate in the national effort, and despite its opposition to the customs duty increase, the India Gems & Jewelry Trade Federation decided to stop selling gold bars and golden coins to individuals, thus reducing the jewelry trade. “We are reasonable people,” says Narang, who is also one of the Federation leaders. “We want to contribute to the national effort.”
Gold “part of India’s DNA”
But that won’t suffice if the country is to deter a desire that is deeply rooted in the Indian psyche. “Gold is part of India’s DNA,” Narang says with a smile. “They’re inseparable,” confirms Kewal Duggal from the Gems and Jewelry Export Promotion Council.
India used to have such large reserves of gold that it was nicknamed the “Bird of gold,” as a result attracting many greedy invaders through its history. In the Rigveda, one of the four canonical Hindu texts, the cosmos was born of a gilded uterus. And in the Hindu Pantheon, many gods are brocaded with gold, as the metal symbolizes the mind’s superiority over ephemeral bodies. Buying gold is therefore a way of attracting the gods’ favors, especially from Lakshmi, Vishnu’s wife and goddess of wealth and prosperity.
In the southwestern state of Kerala, people add powdered gold to the honey that ends up in a newborn baby’s mouth, to ensure the child’s good fortune. As for the dead, mourners place a couple of coins in their mouths so that they’re not without resources in the afterlife. That’s not all. The 10 million weddings celebrated each year in India are yet another opportunity for the precious metal to shine. “Not offering gold as a wedding gift is a social mistake, a lack of taste. It damages your status,” says jeweler Rahul Gupta.
In fact, there are as many chances to buy gold as there are Hindu celebrations. But two dates are particularly important. The first one is Akshaya Tritiya, during which Hindus celebrate the day Ganesha — the god with the elephant head — began writing the Mahabharata, one of Hinduism’s mythological epics. The second is Dhanteras, a day of celebration to the glory of Lakshmi.
A means of security
There is now, however, another reason besides mythology for this frenzy, and it is linked to the search for financial security. To buy gold is to protect oneself ahead of difficult times — a reaction rooted in the country’s collective unconscious after centuries interspersed with invasions, wars and the chaos these brought.
Ramesh Narang tells how his family was saved from poverty thanks to the jewelry that his grandmother took with her when she was forced to leave Lahore (now in Pakistan) during the bloody partition of the British Indian Empire. “The family fled for New Delhi, and it survived there thanks to the jewels,” he explains.
Although the context has since changed, this fear of instability still exists today, as the economic situation is increasingly unpredictable. “People see gold as a safe asset, unlike other properties,” says Jayati Ghosh, professor of economics at New Delhi’s Jawaharlal National University.
Over the last few years, gold has even become a speculative investment, particularly among the urban upper class. This unprecedented evolution is bad news for the government, because the demand increases when prices go up as a consequence of higher customs duties.
It is therefore important that the authorities remain cautious even if official figures indicate a massive drop in gold imports. Professionals admit that if indeed demand has fallen — partly due to price volatility resulting from the Syrian conflict and global recession — the drop is certainly not that huge.
The decrease must be counterbalanced by the consideration that new customs regulations have encouraged the rise of a black market. The second quarter saw a sixfold increase in the quantity of gold illegally introduced into India (generally from Dubai) and seized at New Delhi’s international airport. Evidence that the Indian “Bird of gold” still flies high in the sky with the gods.
