ASIA / PACIFIC
Page 4 n THE ASIAN REPORTER
January 6, 2014
India gold tax hits bridal
budgets; smuggling up
By Kay Johnson
AP Business Writer
UMBAI, India — With India’s
wedding season in full swing,
the glass sales counters in
Mumbai’s famed Zhaveri gold bazaars are
crowded with customers eyeing elaborate
headpieces, nose rings, and necklaces. No
one does jewelry quite like an Indian bride,
who by tradition wears all the gold she can
stand up in and her family can afford.
These days, though, even the most
ambitious bridal budgets don’t bring the
bling like they used to, thanks to hikes in
import duties and a rise in local gold prices
that have shoppers like Rajanikant Mehta
grumbling.
Mehta, who owns a factory outside the
capital, had planned to spend about
100,000 rupees ($1,800) on a necklace for
the woman who married his son last
month, but was unhappy about what he
was getting for his money. Gold prices in
India, which imports nearly all its gold,
have risen 50 percent over the past three
years to about 87,000 rupees, or about
$1,400, an ounce.
Thanks to the new tax and weaker
rupee, that’s about a 20 percent premium
over the world market price, hovering just
under $1,200 an ounce.
“The price of gold should be lower,”
Mehta complained. “This is a globalized
world. If the prices are similar to the prices
elsewhere, then the purchase of gold will
increase.”
More gold-buying, though, is exactly
what the Indian government is trying to
stop by raising import duties three times
last year to 10 percent on gold bullion — up
from two percent in January — and 15
percent on gold jewelry.
Gold is India’s second-biggest import
behind oil, and purchases have soared in
recent years as rising incomes from a
decade of economic growth sent Indian
consumers on a buying streak.
The problem is that the greater buying
of the precious metal has dealt a blow to
India’s economy by increasing the flow of
money out of country compared to inflows.
As a result, the current account deficit rose
to a historic high of 4.8 percent of India’s
gross domestic product in the fiscal year
that ended in March 2013.
That in turn has helped weaken the
rupee by about 10 percent this year,
making many products more expensive by
raising the cost of oil, priced in dollars, and
other raw materials.
But in trying to discourage gold-buying,
India is taking on a passion that dates
back thousands of years and is deeply
entwined in Indian culture. In some Hindu
legends, Brahma, the god who created the
universe, was born from a gold egg. The
goddess Lakshmi is portrayed with a
golden complexion and gold coins flowing
from her hands. It’s considered good luck
to give gold, especially to a bride.
Still, the tax measures appear to have
worked, with gold imports down 32
percent in the July-September quarter
and India on track to lose its status as the
world’s No. 1 consumer of gold from China.
The drop has eased pressure on the
current account deficit, now on track to
reach a more comfortable annual average
of three percent of GDP. The government
hasn’t said what it plans to do with the
extra revenue, but the country faces a big
fiscal deficit, so every bit helps.
The official numbers tell only part of the
story, though, since the higher import
duties have also given birth to increasingly
creative smuggling schemes.
According to Indian media reports,
customs authorities have busted people
with gold bars hidden in mobile phone
battery compartments, a man with gold
M
VILLAGE OF WIDOWS. Women return after work at Deoli-Benigram village in Rudraprayag district, in the
northern state of Uttarakhand, India. The Indian government still doesn’t have a final toll for the thousands of peo-
ple killed in massive flash floods last year, but in the Himalayan hamlet known as the Village of Widows, the loss
is all too specific: 57 people killed, about a quarter of its population. The village has 37 widows from the floods,
making up about a third of its remaining inhabitants and giving the town its grim new name. (AP Photo/Rajesh
Kumar Singh)
‘Village of Widows’ struggles
after Indian floods
By Biswajeet Banerjee
The Associated Press
EOLI-BENIGRAM, India — The
Indian government still doesn’t
have a final toll for the thousands
of people killed in massive flash floods last
year, but in the Himalayan hamlet known
as the Village of Widows, the loss is all too
specific: 57 people killed, about a quarter
of its population.
Six months after walls of melted glacier,
mud, and debris came crashing down the
mountainside, the village officially named
Deoli-Benigram has 37 widows from the
floods, making up about a third of its
remaining inhabitants and giving the
town its grim new name.
Along with their loved ones, the grieving
women’s livelihoods were also lost, and
they say the state’s help is not enough.
“Just six months ago, we were the
richest family in this village, and now we
do not know where our next meal will come
from,” says Bijaya Devi, tears rolling down
her face as her orphaned one-year-old
grandson reaches up to touch her cheek.
Devi lost her husband, three of her sons,
and a nephew in the June 17 floods, which
devastated the temple town of Kedarnath
where most of the men in the village made
their livings.
At age 64, Devi is the village’s oldest
widow. The youngest is her 22-year-old
daughter-in-law. Both of their husbands
worked in the family’s small lodge and
grocery store in Kedarnath which catered
to pilgrims of the shrine.
The Indian government has been
criticized for its slow response to the floods
in the northern state of Uttarakhand, near
Tibet. In all, about 1,000 bodies were found
and some 5,700 people are missing.
The early monsoon floods struck near
the end of the summer Hindu pilgrimage
to the Kedarnath shrine — one of four
major temple towns in the area 11,500 feet
D
Summer Run
high in the Garhwal Himalayan mountain
range. Many of the surrounding people
depend on temple tourism to make their
livings, either as priests, innkeepers, or
guides with mules to take pilgrims up the
steep trails.
The Kedarnath temple — dedicated to
the Hindu god Shiva — was not badly
damaged itself, but the area around it is
still strewn with piles of debris up to 10
feet high.
The government has distributed
500,000 rupees (about $8,000) to families
in the area who lost a breadwinner, but the
villagers say what they need are jobs, and
for roads and electricity to be restored.
They worry that next summer’s pilgrims
won’t come to the devastated area, even if
they did have a way to rebuild their
businesses. But with the harsh Himalayan
winter setting in, many are concerned just
with surviving.
“Earlier, the life in the hills was
dangerous, but now it is hell. There are no
roads, no water, no electricity, and no
jobs,” said Vinod Kumar in the village of
Bhatwadi, also near Kedarnath. “People in
many villages are still living in make-shift
tents. How can they survive in tents? How
will they keep themselves warm?”
q
Tanaka’s team says he
can seek career in MLB
Continued from page 3
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BLING ON A BUDGET. An Indian salesman
writes details about gold jewelry at a shop in Mumbai,
India. Gold is India’s second-biggest import behind
oil, and purchases have soared in recent years as ris-
ing incomes from a decade of economic growth sent
Indian consumers on a buying streak. The problem is
that the greater buying of the precious metal has dealt
a blow to India’s economy by increasing the flow of
money out of country compared to inflows. As a result,
the current account deficit rose to a historic high of
4.8 percent of India’s gross domestic product in the
fiscal year that ended in March. (AP Photo/Rajanish
Kakade)
necklaces wrapped around his legs, and
another man who had fashioned 109
solid-gold staples, painted them gray, and
stapled them to the box of a television he
was legally importing. Local media
reported the staples weighed a total of 755
grams (26.6 ounces) and were valued at 1.9
million rupees (about $30,500).
The seizures are probably only a fraction
of the amount of smuggled gold getting
through, according to the U.K.-based
World Gold Council.
“Going by the number of seizures that
have been made at airports and elsewhere,
there is enough evidence to say that
smuggling probably has doubled this
year,” said Somasundaram, the India
director for the World Gold Council.
It’s impossible to know the exact amount
being successfully smuggled in, said
Somasundaram, who uses just one name.
But the council has noted a 125 percent
rise in third-quarter gold sales in Thailand
over the same period the previous year, to
more than 35 tons. That suggests Indian
smugglers may be buying much of their
gold there.
Despite the steps to limit imports,
India’s demand for gold remains robust.
It’s plainly evident during wedding sea-
son, which runs from November through
January. The custom of adorning brides
with gold is both spiritual — gold is a
powerful symbol of purity — and practical.
The wife’s wedding adornments belong to
her as insurance against a bad marriage,
even though many men confiscate it.
In the southern state of Kerala, the
escalation of bridal jewelry extravagance
is so dramatic that the local women’s
commission has even proposed a law
limiting how much a bride can wear — a
measure bound to meet popular
opposition.
“Everyone likes gold. Marriage happens
just once in your life,” Abhirami
Damodaran said as she shopped for her
wedding jewelry.
The daughter of a real estate
businessman in Kerala, she plans to flaunt
a whopping 3.2 kilograms (about 7 pounds)
of gold worth about 9.6 million rupees, or
$150,000, on her big day.
“When we wear gold, it’s not only the
bride who is happy, but her parents as
well,” she said. “They are giving gold as
part of a future investment.”