Shift attitude to cut gold demand: RBI
We have become a poor country, we need cultural change towards gold, says deputy governor.business Updated: Jul 22, 2012 22:44 IST
A big shift is needed in people’s social and cultural attitudes towards gold to cut its demand, which in turn will help ease the current account situation, Reserve Bank deputy governor KC Chakrabarty has said.
“90% of the gold demand is jewellery or to offer to God. Both have to stop,” Chakrabarty said, while speaking at an event here over the weekend. Sounding sensitive to the fact that offerings at temples come under the realm of faith, he said, “Yes, if it is religious value, it is the faith, (then) why do you require ornaments of 22 carats gold? Why not 2 carat gold? Ultimately, ornament is ornament.”
The societal obsession with gold is an archaic idea of the pre-historic times when India was a rich society of abundance, he said. "Wearing gold as an ornament was a culture when you were a rich society, when you were contributing to 30% of the GDP of the world. Today, we have become a poor country, we need to change our culture." He added "social and cultural revolution" was needed in attitude towards gold.
Chakrabarty said there is no “intrinsic value” in the “speculative” investment of gold and urged financial wizards like chartered accountants to popularise the non-productivity of investment in gold.
The precious metal can’t be used for anything productive and gains in value only because of a “mad rush” for the commodity among speculators and the day this will end, the price will fall sharply, he added.