Disclosure of PAN Card details is driving Indians away from Buying gold
Gold Demand in India declined by a massive 28% during 2016 July and September quarter due to high prices and change in government policies including requirement of permanent account number (PAN) card and introduction of excise duty resulting into 42-day strike.
The global body the World Gold Council (WGC) estimated India’s gold demand at 194.8 tonnes for
the July – September quarter of 2016 compared to 271.1 tonnes for the corresponding quarter last
year. The quarterly demand for the third quarter, however, is the highest for the current
calendar year as good monsoon coupled with sustained economic growth helped revive rural demand,
the key for gold purchases, in India.
Gold price increased by a sharp 22% to an average Rs 28,733.9 per 10g for the third quarter of
calendar 2016 from an average Rs 23,476.1 per 10g in the same period last year. In dollar term,
too, average gold price jumped by 19% to $1334.8 an oz for July – September 2016 compared to
$1124.3 an oz for the same quarter last year.
“While an elevated price level has been an obvious factor for the decline in gold demand volume,
other issues appear to have had an impact on demand – such as the trade strike following the
introduction of excise duty, the regulation of PAN card for purchases over Rs 200,000 and the
subdued sentiment of gold buying when the income disclosure scheme was running and the usual
discounts to bullion prices in the urorganised segments that caused further disruption to the
official trade channel.
For the entire calendar year 2016, however, the WGC revised its gold demand forecasts earlier
from between 750-850 tonnes lower to 650-750 tonnes, the lowest in seven years.
World Gold Council said that the jewellery demand was lower by 28% at 154.7 tonnes for the July – September quarter 2016 from 241.1 tonnes for the same quarter previous year, investment demand also plunged by 30% to 40.1 tonnes for the third quarter of the current calendar year from 57 tonnes in the corresponding quarter last year.
During the first nine month of calendar 2016, India’s total gold demand stood at 441.2 tonnes,
28.9% lower than 621.2 tonnes reported in the same comparable period last year.