Gold Rate In Punjab
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The Gold Control Act, is a repealed Act of the Parliament of India which was enacted to control sale and holding of gold in personal possession. However excessive demand for gold in India with negligible indigenous production is met with gold imports leading to drastic devaluation of Indian rupee and depletion of foreign exchange reserves to alarming levels.
Devaluation of Indian rupee is also leading to steep rise in food commodity prices due to costlier petroleum products imports.
In these circumstances, the gold import policy of India aims at curbing the gold imports to manageable level time to time by imposing taxes and legal restrictions. Post-Independence, the foreign exchange drain was accentuated in during the border dispute with China. Morarji Desaithen finance minister, came out with Gold Control Act,which recalled all gold loans given by banks and banned forward trading in gold.
Inthe production of gold jewellery above 14 carat fineness was banned. Ina gold bond scheme was launched with tax immunity for unaccounted wealth. All these steps failed to yield the desired result. Desai finally introduced the Gold Control Act, on 24 Augustwhich prohibited citizens from owning gold in the form of bars and coins. All existing holding of gold coins and bars had to be converted to jewellery and declared to the authorities.
Goldsmiths were not allowed to own more than gms of gold. They were banned from trading with each other. Desai believed that Indians would respond positively to these steps and stop consuming gold and help conserve precious foreign exchange. New gold jewellery purchases were either recycled or smuggled gold. This legislation killed the official gold market and a large unofficial market sprung up dealing in cash only.
The gold was smuggled in and sold through the unofficial channel wherein, many jewellers and bullion traders traded in smuggled gold. A huge black market developed for gold. Gold Smith were unorganised labour force and could not cope with the new developed situation. Only a few could get the licence to hold the gold, that also in very small quantity, with the result that the members of the Sunar caste, who were depending only on their traditional occupation of making gold ornaments, lost their business and their financial condition deteriorated and families shattered.
InIndia had a major foreign exchange problems and was on verge of default on external liabilities. The Indian Government pledged 40 tons gold from their reserves with the Bank of England and saved the day. Subsequently, India embarked upon the path of economic liberalization. The era of licensing was gradually dissolved. The gold market also benefited because the government abolished the Gold Control Act on 6 June The government thought it more prudent to allow free imports and earn the taxes rather than to lose it all to unofficial channel.
In Septemberthe Govt. However, this plan was not widely accepted by the population. Alarmed by the excessive gold imports by Indians despite the public holdings of gold is in excess of 30, metric tons, Indian Government introduced a new Gold Deposit Scheme with attractive benefits to the gold depositors in the year to recycle the available idling gold in the country for meeting internally the entire fresh ornamental gold demand.
When the inflation adjusted gold value is examined, gold is not an inflation hedge but crisis hedge. When oil prices are higher, it acts as crisis hedge to the oil importing countries to dispose oil stocks at profit and purchase gold with the accrued cash for replenishing oil stocks later during the lower oil price with respect to gold price.
In India, when the agriculture production is good, it will lead to slump in the agriculture commodity prices and raise in gold price due to demand from rural areas.
Similarly, when agriculture commodity prices raise due to less production, gold prices would depress by lack of demand from rural areas. The depleted gold reserves could be purchased back later at lower price during the subsequent bad monsoon years with the funds after selling the food grain stocks at higher price to make up shortfall in the production.
This analogy can be applied to all commodities and gold can be termed as super commodity with characters of international currency. Thus Indian Government or Reserve Bank of India can overcome the economic crisis by effectively managing the gold reserves vis a vis food grain stocks or fertiliser stocks or crude oil stocks. India imports in excess of tons annually including unofficially smuggled gold with negligible local production.
Though the policy is fetching good customs income, the imports demand is not drastically coming down. It is due to the reason that world gold demand is mainly driven by Indians and its price is fixed by Indians in Indian rupees. Imposing customs tax on gold imports in India or devaluation of Indian currency, led to the softening of its international price but remained range bound in rupee terms.
Customs duty imposition also led to increase in gold smuggling but narrowed the trade deficit to permissible limit as the smuggled gold would not get accounted as imports in trade deficit calculations.
The gold imports are also serving to channelise undeclared earnings by exporters and importers of India. Invariably, exporters under invoice their exports whereas importers over invoice their imports to stash black money in tax haven countries. From Wikipedia, the free encyclopedia. Repealed The Gold Control Act, is a repealed Act of the Parliament of India which was enacted to control sale and holding of gold in personal possession.
Gold as an investment. From to " PDF. Retrieved 31 July Retrieved 19 April Retrieved 2 June Retrieved 15 April Retrieved 17 August Retrieved 21 March Retrieved 19 July Retrieved 17 November Retrieved 20 April Retrieved 22 December Retrieved 9 November Retrieved 9 April Financial Years and " PDF. Unlawful Activities Prevention Act.