The $950bn worth of gold held by Indian households is the equivalent of 50 per cent of the country’s nominal GDP in dollar terms. All those gorgeous necklaces and other extravagances weigh 18,000 tonnes, or 11 per cent of the world’s stock, according to the report.
India imports 92 per cent of its gold, making it the third largest of its merchandise imports behind crude oil and capital goods. Gold made up 9.6 per cent of imports so far for the year ending March 2012 – significantly expanding the current account deficit.
On a different but related front, here is an overview of the ongoing deterioration of the Indian economy, still an underreported news story. Here are some economic lessons from Indian retail, a sector which is underperforming.