Industry wants govt to scrutinise gold data to see if there is any discrepancy
Thu Dec 19 2024
Industry bodies have approached the government to look into the steep increase in gold imports in November as they apprehend that some error may have crept into data calculation, as the numbers are much higher than anticipated, sources have said.
“The government is examining the matter and cross-checking data to see whether any double-counting has happened, but there are no sure indications yet about where things might have gone wrong,” an official told businessline.
When contacted, Sachin Jain, CEO for India, World Gold Council, said, “On recent November data, we don’t think the official number put out should be that high keeping in mind what is happening on the ground. We have to wait for the actual number to come out and the government to clarify on the same. Meanwhile, industry has written to the Commerce Ministry to examine and verify that number.”
Increase in demand
November saw an increase in demand for the precious metal due to continued festival buying and a fall in gold prices after an increase during Dhan Teras and Diwali. Moreover, gold is seen as a safe haven for investors, especially with a spiralling geo-political crisis situation around the world, and it has been giving high returns in 2024, some economists observe.
Madan Sabnavis, Chief Economist, Bank of Baroda, said, “We should not be looking at a single month (November). Cumulative for April-November is always better to look at. To my mind, demand has gone up for this asset class (gold), as it has given good returns (28 per cent) this year. If you go back to 2023, 2022 and 2021, we didn’t get the same kind of return. So, there would be genuine rush”.
SGB issue
The fact is there is higher demand for gold as November is also wedding season. Secondly, gold has emerged as an investment vehicle. So long as government and RBI provided sovereign gold bonds (SGBs), people were not going for physical gold, he said.
“With new SGBs not being issued, this could be a factor for increase in demand for physical gold. Whether these factors justify increase from $4 billion in November 2023 to $14 billion in November 2024 or otherwise, the fact is demand has increased,” Sabnavis said.
Gold imports sky-rocketed to a record $14.8 billion in November 2024, up more than 300 per cent from $3.44 billion in November 2023, according to data shared by the Commerce department. However, the government data doesn’t match with numbers provided by industry.
“There is a chance of double counting in SEZ. We think the actual quantity of gold imported into India in November could be lower than what has been reported. We think that when gold came into SEZ, it got reported. When the same gold went out of SEZ, it got reported,“ Chirag Sheth, Principal Consultant, South Asia, Metals Focus, a global precious metals consultancy and research company, said. Metals Focus also happens to be World Gold Council’s official data provider.
Unusual usage
While the Commerce department data pegs gold imports in November at 173 tonne, industry estimated imports during the month at 130-140 tonne.
“On noticing unusual surge, the DGCIS (under Commerce Department) has taken up detailed examination of the gold import data and reconciliation would be done with the data received by CBIC (Central Board of Indirect Taxes and Customs),” another source said.
India’s trade data is highly organised and electronically tracked through systems like ICES and ICEGATE, overseen by DGCI&S, pointed out Ajay Srivastava, former Indian Trade Services officer. These platforms ensure accuracy, reducing the risk of errors or double counting.
“Any product including gold entering India’s territory through filing of bill of entry at Customs is imports into the country. This implies that any subsequent within country movements of gold within the country for use in SEZs, EOUs, or Gift City, or subsequent domestic sales, are not imports and should not figure in total import calculations. DGCI&S and CBIC may check if there is any deviation from this practice,” he said.
Amid concerns about high gold imports in November, the government must address rumors about data integrity to maintain public confidence, Srivastava added.
Source: https://www.thehindubusinessline.com