While Narendra Modi may be pro-gold in principle, there are doubts whether there will be any quick major gold policy changes following his BJP party’s Indian election victory.
LONDON (MINEWEB) – As I write it has become apparent that Narendra Modi’s Bharatiya Janata Party (BJP) party has won the Indian election with what in Indian terms looks like being a landslide victory. The ruling Congress party has conceded defeat. The only unknown as I write is whether the BJP will have won enough seats in India’s parliament to rule on its own without the support of its potential coalition partners or not.
It is widely believed that Modi is favourably inclined towards gold and one suspects the very big Indian gold fabrication and trading sector will have voted en masse for the BJP in the hope that the import restrictions on gold will be eased at the very least.
This will have followed on in particular from Modi’s address at a Bombay Bullion Association meeting last October where he expressed sympathy for the plight of the Indian gold sector and poured scorn on the then government’s gold policies to try and reduce the country’s balance of payments problems. However it should be recognised that Modi is an astute politician and he would have been in full pre-election mode addressing a sector with a potentially significant electoral impact given India’s love affair with gold.
He did say at the beginning of his address that he personally had little connection with gold but did comment: “We have not seen gold just as money, it is related with all aspects of our social life. We have always attached the term ‘gold’ with anything good in our life…In our society, gold is connected with security, respect and a friend in need during hours of crisis.
It is also related to the well-being of our daughters through exchange of the matter during marriage times…After a doctor, the goldsmith is the most trusted man in the family.” See much fuller report on one India news. He went on to say much more which could be taken as being in support of gold as well as decrying the massive amount of gold smuggling which has come about due to the government’s gold policies.
However, Modi is also very concerned with India’s big balance of payments deficit and will be well aware that the gold import restrictions have helped in bringing this down – at least as far as official statistics are concerned, although the country still remains in substantial deficit. He has not promised to repeal the import restrictions and is obviously extremely concerned with the deficit and the consequent decline of the rupee on world exchange markets.
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