In India, like in several other nations, gold is a well-known symbol of wealth and status. Also well-known is Indians’ love for the precious metal.
In December, it was thought that the fruits of this fondness for the yellow metal, boosted by a duty cut announced in the Union Budget in July 2024, had pushed India’s trade deficit to a record high.
While Indians’ love for gold is still nothing to be trifled with, the good news is that the imports were actually not big enough to have caused as high a trade deficit (which sent the rupee plummeting to an all-time low) as was reported last month.
If you’re wondering how, here’s what has happened.
The Indian government has revised its gold import figures for November 2024, slashing the value to $9.84 billion from the previously reported $14.86 billion.
The updated data, released Wednesday (January 8) by the Commerce Ministry’s Directorate General of Commercial Intelligence and Statistics, shows a 34 per cent reduction in inbound shipment values compared to earlier estimates, Moneycontrol reported.
The initial surge in gold imports that ballooned India’s trade deficit was attributed to a calculation error that was reportedly flagged early on.
In December, Moneycontrol had cited unnamed sources as saying that officials likely double-counted shipments stored in warehouses after adopting a new methodology, leading to inflated figures.
One explanation suggested that imports stored by custodians in free trade zone warehouses were inadvertently combined with figures from domestic banks purchasing the gold. This discrepancy drew scrutiny in December when analysts expressed confusion over the sharp rise.
In November, India’s trade deficit was reported to have climbed to an unprecedented $37.8 billion, driven largely by the erroneous gold import data that initially showed a four-fold increase to $14.86 billion from $3.44 billion a year earlier. The Commerce Ministry hinted at a reconciliation of the data in December but did not provide a timeline.
Despite the revised numbers, gold imports remain substantial.
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India’s record-breaking love for gold stays that way despite $5bn cut in import numbers
