WHEN Indian housewife Meera Chopra feels the urge to indulge her addiction,
she ventures — sensible handbag dangling from the nook of one arm — into the
dark, crumbling heart of old Delhi.
“I could go to one of the malls that has come up near my house instead,” she
said, “but frankly, you can’t trust these fancy new places. The stuff they
sell is not always 100% pure.”
Chopra, like her mother before her, has always bought her gear from the same
establishment in the Chandni Chowk area of the ancient capital.
The place lies down a dirty, narrow lane, crowded with bicycle rickshaws and
impatient delivery-wallahs carrying huge bundles on their heads.
Hapless pedestrians must also contend with a minefield of pats left by
wandering sacred cows. But at the far end of the lane stands the reward for
the intrepid: a modest pair of doors that open into a veritable Aladdin’s
cave.
Here, inside the 217-year-old Shri Ram Hari Ram jewellers, all that glitters
really is gold. Rows of glass cabinets showcase masses of bangles and jewel-encrusted
rings. Sideboards sparkle with delicate, chandelier-like earrings, and
spotlights illuminate extravagant Indian wedding necklaces, headpieces and
ornate nose rings — once the preserve of maharanis but today the birthright
of every middle-class bride-to-be.
“For Indian women, owning a certain amount of gold is a must and if you are
like me then you have lots,” beams Chopra, 41, who, like most of her fellow
countrywomen, is loath to reveal the exact value of the jewellery she keeps
squirrelled away in her bedroom strongbox.
“When we marry, we’re given lots of bangles and necklaces and such by our
families, which we keep for the rest of our lives. Also, during our married
lives, whenever we can put some extra cash aside, we buy gold to keep for
our daughters’ weddings.”
Little wonder that India’s astrologically auspicious marriage and festival
season, which lasts from late September to early December, has long been a
frantically busy period for the country’s jewellery industry.
But in recent years, all previous sales records have been smashed. Rapid
economic growth has given rise to what amounts to a gold rush.
According to the World Gold Council, demand for jewellery is up 38% in the
last 12 months, even with the gold price at $789.50 an ounce. India is now
the largest consumer of the precious metal in the world.
“Gold is at a 28-year high, but we have never seen it so busy,” said Mohit
Gupta, a fifth-generation member of the family that owns Shri Ram Hari Ram.
“Jewellery is a status symbol in India and it’s traditional to give gold
during festivals, at the birth of a baby and, of course, at weddings. In
Delhi these days, all the women are dripping in it,” he said.
Indeed, on a recent Saturday afternoon during the height of the gold-buying
season, jewellery shops across Delhi were jam-packed with discerning aunties
and their young protégés. Many spent hours perusing the latest designs while
being waited on by chai-wallahs serving small glasses of hot, milky tea and
by jewellery shop assistants endowed with saintly patience.
In one of south Delhi’s new malls, where the young female clientele swagger
about in high heels and designer sunglasses à la Beverly Hills, Tarun Jain,
owner of the exclusive Sil Gold jewellery boutique, said he often sold
designer wedding rings for £20,000 or more.
“In the West, women tend to like inconspicuous jewellery they can wear to work
every day,” said Jain. “But in India the bolder the better.”
Despite their extravagant tastes, India’s burgeoning urban middle class is
only partly responsible for the phenomenal growth in the country’s appetite
for gold.
Surprisingly perhaps, two-thirds of the 920 tonnes of gold sold in the past 12
months — worth $19 billion (£9.4 billion) — has been purchased outside the
big cities, in India’s villages and small towns. Economists say this
suggests that some of the poorest Indians are now beginning to benefit from
the country’s 9% economic growth, albeit it in a small way.
“Gold is the easiest form of investment and collateral in rural India,” said
Philip Olden, managing director of the World Gold Council. “The local
village jeweller is to a degree the bank because there isn’t the same level
of financial services as elsewhere. Farmers will invest any profit from a
good crop into gold a few dollars at a time over years and years.”
Gold, along with property, also remains an attractive option for Indian
businessmen seeking to hide undeclared profits from the taxman.
“Most businesses operate two sets of accounts — one black, one white,” said
Arun Kumar, professor of economics at Delhi’s Jawaharlal Nehru University.
“Gold is an easy way to hide profit because you pay cash and put it in your
safe and no-one need know.”
Kumar believes that despite economic liberalisation and lower tax rates, the
so-called “black” economy continues to thrive, driving vast sums of
undeclared income into gold.
“India’s black economy is nearly 50% of GDP,” said Kumar, author of The Black
Economy in India. “The government likes to pretend that it’s much, much
lower, but that’s because a nexus of politicians, businessmen and
bureaucrats control it.”
The Indian finance ministry is unable or unwilling to provide a figure for the
size of the country’s parallel economy, and government spokesmen downplay
its significance.
But even if the black economy is only as large as 20% of GDP, the figure often
quoted in the Indian media, that amounts to $80 billion a year and is more
than the entire federal budget and over twice the country’s annual exports.
Prime Minister Manmohan Singh’s government has considered various amnesty
schemes to persuade individuals to declare their “black” assets, although
most experts agree that such proposals are unworkable and run the risk of
legitimising corrupt practices.
The government is also keen to persuade Indian women to kick their gold habit.
According to Bullionvault.com, private individuals in India own more than
14,000 tonnes of plain necklaces, rings and bracelets, amounting to roughly
10% of the world’s entire above-ground gold stocks.
“In 2006 Indians spent more on gold than foreign companies invested in India,”
said Saumitra Chaudhuri, economic adviser with ICRA, an
investment-information provider.
He points out that less than 2% of the population have invested in equities.
In March, India will establish its first exchange-traded gold fund, providing
investors with the opportunity to earn more on the metal but denying them
physical ownership.
Such schemes have proved popular in Europe and America. But many of the women
questioned in the Shri Ram Hari Ram jewellery shop were lukewarm about such
investment schemes.
“I could never sell my jewellery and put the money on the stock market,” said
Chopra. “You can’t wear stocks and shares to a wedding.”
