Need for more research on Gold in India!
Gold
in India continues to be a work in process from the perspective of a
comprehensive economic policy. As a commodity, it is among the severely
under-researched items given its importance in the economy as well as the
society of our country. It employs more than 5 million people and has annual
import bill of more than 200,000 crores ($30 billion).
This
sentiment was echoed by Shri Govind Mohan, Joint Secretary, (IER &
Investment), Dept. of Economic Affairs, Ministry of Finance. He was addressing
the conference on Gold and Gold Markets organized by the Indian Institute of
Management’s India Gold Policy Centre or IGPC@ IIMA.
The
Conference saw presentations of 14 research papers by academic scholars and
other experts from India and other countries. Govind Mohan also mentioned the
need for a more cohesive approach among all stakeholders of Gold including the
government, academia, businesses as well as the consumers in creating a
long-term policy towards constructive usage of Gold in India’s economic development
over a long term.
Prof.
Arvind Sahay, Head IGPC said, “India, being the second biggest market of Gold
in the world, needs to evolve strategies that help use Gold to her economic
advantage. The best brains need to come together and address issues such as
price volatility, imports, the place of gold in savings and insurance, how gold
may be monetized and brought back into circulation, consumption patterns and so
on. Any development in gold market directly impacts many other sectors and
markets in the economic environment of India.”
Prof.
Errol D’Souza, Director-in-Charge IIMA opined “India’s challenge when compared
to other countries arise from the emotional and sentimental value her citizens
attach to gold. This makes it unique and more complex. The growth of this
country will be spurred to much higher if India manages to mobilize some of the
gold with its citizens which is kept as a dead investment.”
There
were three technical sessions categorized as Efficiency of Gold Markets, Policy
Issues in Gold and Gold Asset Allocation and Investment Issues. Among the
research papers presented at the conference four were by IIMA viz. Distribution
of durable assets across households and generations; Impact of CTT on gold
derivatives markets: analysis based on ultra-high frequency order flow and
trade data; Gold in Central bank reserves: Role of global risk and liquidity
and Gold Monetization as a Transformative Policy: A mixed method analysis.
Other
papers presented by various researchers were: A study of excess volatility of
gold and silver; Does information spill over and leverage effect exist in world
gold markets? Estimating elasticity of import demand for gold in India; Gold
and gold mining stocks and equities – exploring their hedge; diversifier and safe
haven properties in developed markets;
Investigation
of price discovery for gold future market prices; Multifractal modeling of the
Indian gold market; Relationship between gold and other markets; Return and
volatility spillovers: an evaluation of India’s demonetization policy and
Sources of uncertainty and the Indian economy. Prof. Dirk Baur from University
of Western Australia shared the experience on Gold and Geopolitical Risk.
A
panel discussion on designing an effective policy and regulatory framework for
gold in India constituted by eminent academics and industry leaders deliberated
on key issues in the Indian gold industry and effective policies for a
conducive, efficient, transparent and robust gold ecosystem. Most serious
observation was the extent of relationship and growing impact of gold on other
markets in India.
The
conference concluded with the consensus to create a platform that brings all
stakeholders in Gold and exchange ideas on a regular basis.
