KOLKATA, India, Sept. 20 (Xinhua) -- As gold prices in India are floating near record levels, consumers have resorted to remaking jewelry from scrap gold in an unprecedented way, top industry executives said Thursday.
India, the world's biggest gold consumer, barely produces any gold and usually imports to meet its ravenous appetite. The remaking of jewelry from scrap gold is expected to rise three fold to a whopping 300 tonne in the fiscal year through March, Prithviraj Kothari, president of the Bombay Bullion Association, said.
Gold imports rose more than 10 percent in the last fiscal to 1, 067 tonne on soaring investment interest due to its status as a safe-haven asset and a hedge against inflation, although the purchases from overseas tumbled in the last quarter due to record prices. Any fall in gold imports would augur well for the country' s current account deficit, which shot up to 4.2 percent of the gross domestic product in the fiscal year through March 2012, compared with 2.7 percent a year before.
The Indian Prime Minister's Economic Advisory Council expects the current account deficit at 3.6 percent of the gross domestic product (GDP) in the current fiscal, anticipating a slump in gold imports.
Meanwhile, the rupee has depreciated by 9.2 percent so far this fiscal and 21.3 percent in the past one year, making overseas purchases more expensive.
Ajay Mitra, managing director (India & the Middle East) at the World Gold Council said the Council expects gold imports by India to fall to 650 to 700 tonne in the calendar year 2012, compared with 963 tonne a year before.
The average gold price rallied 28 percent in 2011 to 1,571.52 U. S. dollars per troy ounce, although domestic prices surged by 32 percent due to a weak rupee.