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Gold: An Economic Lifeline for Women in India

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Gold makes up an integral part of the economy of India in general, but for Indian women, it often serves as an economic lifeline.

Indians have a love affair with gold. The country ranks as the second largest consumer of the yellow metal in the world. It’s not just a luxury. Even the poor buy gold in India. The yellow metal is interwoven into the country’s marriage ceremonies, and cultural and religious rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system.

Women drive much of the traditional demand for gold in the India, as former Reserve Bank of India governor Y.V. Reddy explained in the recent issue of the World Gold Council publication The Gold Investor.

Gold is inherited by women and they are deprived of it only under desperate circumstances. As gold is significantly nondepreciating in its physical form or in terms of value, it provides safety and security for women and, under difficult circumstances, liquidity.”

Because of gold’s deep cultural roots in India, many policymakers view it as primitive and unsophisticated. Some government officials have actively tried to discourage investment in the yellow metal. Reddy says this is a mistake.

I believe that, merely because demand for gold is traditional, it does not mean that it is irrational or undesirable.”

It certainly isn’t irrational for Indian women. In fact, it serves as an economic equalizer in a society that still does not afford women equal rights. Owning gold provides a vital economic lifeline for Indian women, particularly because it allows them to gain access to cash, and even goods and services, during difficult times.

This is particularly important given the absence of property rights for women in most of India. Even where property rights are equal on paper, women cannot in reality exercise them.”

Reddy went on to say the impact of government policies that limit gold imports into the country are fundamentally unfair to women.

It seems highly inappropriate to discourage gold imports, which meet women’s needs, while allowing imports such as luxury cars and men’s shaving lotion. I believe that public policy with regard to gold should be fair to all, and not imply a bias against tradition or gender.”

After a slump in 2016, Indians are buying gold. Gold imports into the country have already topped the total for all of 2016. Indian gold demand in Q2 surged by 126% year-on-year. Demand for gold in India hit the highest level in the last six quarters. India imported 272 tons of gold in Q2 2017, up from 78 tons in the same period last year.

Reddy said he thinks the future for gold is bright, and not just in his own country.

Overall, as someone with a strong belief in gold’s economic contribution, I am optimistic about its future, not just in India but worldwide. There have been interesting developments across the globe that signal a heightened significance for gold in the global economy, particularly as a store of value.”

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