The unintended consequences of India’s efforts to suppress demand for gold

India is the world's largest gold importer (photo:dpa)
India is the world's largest gold importer (photo:dpa)

India has put up the import duty on gold from four to six per cent in an effort to suppress demand. It is the latest in a series of government attempts to rein in India’s gold imports which account for a large proportion of the country’s growing current account deficit. But critics say the lessons from the past show it is the wrong move and could have far-reaching consequences – not just for India but for the global economy.

INDIA is a developing country with hundreds of millions of its people struggling to survive on less than US$2 per day. Yet, it is estimated that households and temples in India privately hold between 18-25,000 tonnes of gold worth more than US$1 trillion which amo...

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