Gold Shortage in India

[Jeff]

Interesting BT article at:
Not much of festival season as gold runs dry - Business Today - Business News

In short, the government has imposed all sorts of restrictions on importing gold, which has resulted in gold shortages, the price of gold in India being more than $100 higher than in London, and a black market:

In India's biggest bullion market, Mumbai's Zaveri Bazaar, gold dealers are busy -- not filling orders for customers, but busy avoiding phone calls because they don't have any gold to sell....

Gold is an integral part of Indian culture, given as a dowry for marriages, which tend to be timed around auspicious days that are often religious festivals.

The shortage of the metal sent Indian gold premiums to more than $100 an ounce over London prices this month when demand far exceeded supply due to the Dussehra festival, one of several connected with harvests and invoking Lakshmi, the goddess of wealth....

India was the world's biggest gold buyer in 2012 but could lose the top spot to China this year after the clampdown.

 

[CJ]

they had to stop the import to save the economy. Second most imported thing for India is gold, first being crude oil. This Imported gold really hurts Rupee's value against USD, so this restrictions on import are justified.