PM Defends Hike in duty

Finance Minister Pranab Mukherjee defended the government's decision to double import duty on gold saying that high imports were straining balance of payments and exchange rate of the rupee. India imported gold and silver worth $54.5 bln in Apr-Feb, accounting for 12.6% of total imports “The import of gold of such magnitude strains balance of payments and affects exchange rate of rupee through impacting supply-demand balance of foreign exchange”, said Mr.Mukherjee
 
I agree to the balance of payment issue that the government is facing via high imports of gold. But double duty is not the right solution to this issue. Gold has always been a popular investment destination for all types of investors, standing out as a tried and true safe haven that generally performs well in times of equity market turbulence, uncertainty as well as an alternative to fiat currencies that have occasionally come under pressure. In India, Gold is bought by almost all classes of society and such a duty will affect the imports and in turn the reserves. It will also lead to an increase in various other illegal modes of gold procurement so as to save the extra costs over it.

Indian households have nearly 25,000 to 30,000 tonnes of Gold. I would suggest Government of India to introduce schemes like minimum tax scheme wherein an investor is charged minimum tax to convert his/her unaccounted gold into an accounted one. By this the government treasury will also increase and the idle gold can be put to use. The other scheme can be a VDS scheme (voluntary disclosure scheme) by which the Gold /Silver can be brought to the market.

There are much feasible solutions available rather than imposing such duties

UNION BUDGET 2012-13- WE STRONGLY OPPOSE IT

Let me first state down the important highlights of the budget with regards to the Bullion, Gem and jewellery Industry-

· Gold import duty has been doubled to 4 per cent
· Excise duty on Branded and non Branded Jewellery has increased by one per cent
· 2 per cent tax on cash sales of over 2 lakh
· Excise duty of 1 percent on silver branded jewellery has been removed.

Budget 2012 has been a disappointing one. We strongly oppose this budget.

It will create a negative impact not only for the bullion and jewellery dealers but also for the common man.

The government had increased duty in December on gold and silver. This itself hampered the bullion business. An additional 2 percent increase of import duty on gold has worsened the situation, not only for bullion industry but also for the common man.
We can say that government has levied this duty on the common man. Increase in gold prices along with this increase in duty- how will the common man survive?
Gold is tradition, gold is culture. Gold is bought not only on auspicious occasions and weddings but also as an investment. Its is rightly said “save money to invest in gold”

To explain in layman terms,
1. Duty is variable.
2. Yesterday, if an individual would have bought 100gms Gold at 27,300/-(10gms quote) i.e. 2,73,000 for 100gms. The duty was 5,600. As per today’s declaration, the duty is almost double i.e. 11,200. Now the same gold quantity for the same price is valued higher by 5,600 i.e. 2,78,600 for 100gms.

Such moves of the government will create a slump in the market.

Moreover, Imports are expected to fall by 50% in the next 6 months.
This move will result in smuggling and opening up of other illegal channels to get gold in India.

I totally oppose this budget. The only positive point is the removal of excise duty on silver branded jewellery. But will that really help?
The next thing that can help our industry is that this extra revenue generated through increase in duty is used by government for creating new hallmarking centres, research and development in mining sector.
The Bullion, gem and jewellery industry needs to be more organized.

GST has been postponed to October. We insist the government to implement GST the earliest. If implemented, it is expected to provide a significant boost to investment and growth of the economy. GST will have a significant impact on almost all aspects of businesses operating in the country, including the supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting systems and transactions management. A flat 1% across India should be levied by the government, which would replace most indirect taxes currently in place.

With increasing competition from China, the government should have encouraged the development and promotion of BRANDED Jewellery in the International market, for the long term sustainable growth of the Gems & Jewellery Sector. However, the increase in excise duty will hamper the growth of this sector.



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PEACE PROTEST AGAINST THE UNION BUDGET

The Bombay Bullion Association along with all the bullion and jewellery dealers stood united against the Union Budget 2012-13. March 17,18 and 19 were declared bandh. We all protested against the duties levied tin this year's budget. We hope that some initiative is taken by the government and they take decision in favor of the common man .

Felicitated with 'Jain Ratna Award' by the Honorable President

                                          

I, Prithviraj Kothari would like to express my heartiest thanks to you, for sending me your wishes and beautiful flowers on 13th March 2012.

It gives me immense pleasure in seeing that with grace of god, my family, all good friends and colleagues, I have managed to reach to a level which I have dreamt of. Receiving this award from Hon President of India,Smt. Pratibhadevi Patil, is a great pride in itself.

I still wish and want to do good for the whole Jain Fraternity and take it to much higher peak of success in the years to come.I believe in determination and dreaming big each time.

Again thanking you for the best wishes and continued support you have rendered.

Volatility in GOLD.....WHY?????

SPOT MARKET prices for gold bullion hit a six-week low of $1682 an ounce Tuesday lunchtime in London – a fall of 1.8% from last week's close – as stocks, commodities and the Euro continued their recent slide and uncertainty hung over recent European agreements.

Gold futures haven't settled below $US1,700 since January 24, though prices moved below this level in intraday trade twice last week.

At the time, Federal Reserve Chairman Ben Bernanke's testimony to Congress, which hinted that a third round of monetary stimulus wasn't imminent, triggered a violent sell off that saw the contract lose $66 a troy ounce.

Precious metals came under heavy selling pressure on Tuesday… sentiment was dampened further by concerns that Greece might be struggling to reach the necessary participation rate of private bond holders to implement its debt swap

Markets were also spooked on Tuesday by a 0.3-percent drop in GDP in the Euro zone in the first quarter, which followed a downgrade in China's 2012 growth target to 7.5 percent from the longstanding eight percent earlier this week.

Market participants were awaiting the release of US ADP employment data, German factory orders and US oil Inventories ahead of the week's key data event - US non-farm payrolls.

However, Wednesday saw a shift in the downward movement. Market sentiments changes and gold jumped back.

A report stated that under the potential program, “The Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.”

Following the report, April Gold Futures contract traded a modest $16.00 range as physical buying reemerge. After trading as low as $1663.40 during Wednesday’s session gold closed at $1683.90 on Thursday as physical “bargain buying” along with a weaker U.S Dollar helped to fuel the rally. 

Reports that Greece’s PSI debt swap deal has been accepted by investors that hold 58% of the eligible bonds were seen as good news for the Euro and therefore pressured the U.S Dollar. 

Worries that Greece may not secure a deal with private creditors to cut its debt by the Thursday deadline spurred selling in shares, but pressure on gold was offset by a bounce in the euro and physical off take.

Gold regained some ground on Wednesday as jewelers in Asia snapped up the metal after prices dropped 2 percent in the previous session, while lingering fears about a possible Greek default sent investors scurrying to buy the dollar.

Real Gold Prices have risen sharply since over the last decade. Stocks, in contrast, have gone pretty much nowhere. Because over the last 102 years, and including dividends, the real return on US equities has typically been negative when gold was up, and positive when gold was down.

So owning some of both would seem the sensible, safe course, now weighting one or the other. Such a re-weighting would now be advisable if you think inflation is about to take off.