In the 12-month period ended September, Indians bought 1,059 tonnes of gold, accounting for 26.6% of the total demand for gold worldwide. According to the World Gold Council, Indian households have 18,000 tonnes of gold in stock, amounting to roughly $950 billion, or around Rs 50 trillion, (approximately 50% of the country’s nominal GDP).
But, according to Macquarie Capital Securities (India) Pvt. Ltd, India’s insatiable appetite for gold, most of which is imported, is leading to a widening of its current account deficit. Macquarie’s estimates suggest that net gold imports alone contributed nearly 40 basis points (bps) to the 130 bps widening of India’s current account deficit between FY08 and FY11. One basis point is one-hundredth of a percentage point.
Also See | Chart of the day (PDF)
Graphic by Yogesh Kumar/Mint