MUMBAI (Commodity Online): India holds nine percent of the gold reserves estimated at 14,000 tonnes but fails to generate wealth out of it due to weak investment in exploration and mining activities, according to Mukesh Kothari, Director, RiddiSiddhi Bullions Ltd, leading bullion traders in India.
“India is rich in mines but the R&D is so poor that we are hardly in position to extract much of its abundant resources. To be precise the country produced and refined only a minuscule 2.46 tonne worth Rs312 crore in 2008-09, the latest period for which data are available,” according to Mukesh Kothari.
That’s less than 1% of the value of metallic mineral production in the country. On the other hand, China boosted its gold refining business after it gave companies a single-window clearance along with fiscal and infrastructure incentives, he said. Today, the country produces and refines about 320 tonne (approx.) of gold annually, the most in the world.
“I feel that if R&D is carried in an efficient way, production of the metal will increase. This will reduce dependency on imports and in turn help the government to increase the forex reserve. As the metal will be extracted locally, customers will be benefitted pricewise, due to local production. As we know, India is one of the leading consumers of gold and could challenge the likes of China and South Africa in gold production provided the right policy decisions and enabling environment for gold exploration and mining is put in place,” Mukesh Kothari added.
Mukesh Kothari also took exception to India government move to curb consumption of gold saying it is an unproductive asset.
“Gold is always considered as a safe haven asset or too be precise a perfect hedge against any economic turmoil. Investing i.e. saving in gold is preservation and even addition of individual’s wealth. Savings is a way by which you expect returns over a later stage in life or during some emergency. So, calling gold investment a non productive one is not correct when we are talking about a shield for Indian people who are running the economy.”