by Ursula Kampmann
translated by Annika Backe
May 21, 2015 – How much gold is stored in India, nobody really knows. There is, however, any number of guesses. In a 2014 study, the World Gold Council speaks of 22,000 tons of privately held gold. That would be the equivalent of a large herd of about 6,300 Indian elephants or a fleet of 135 jumbo jets. The plan is to make this gold accessible and further boost Indian economy.
The Indian rupee has a problem of confidence, as have the Indian banks. Instead of storing the family’s fortunes in a bank, the head of family rather buys gold jewelry. As a comprehensive World Gold Council study reveals, the vast majority of respondents consider it killing two birds with one stone: gold is not only something to adorn oneself with but a financial guarantee. As a matter of fact, 77% of the respondents bought gold in 2013, some of them even more than once. That made 620 tons of gold in the time between January and September alone, four tons above this period’s average. Every Indian citizen spends – and this is another result of the study – 8% of the money accessible on a daily basis on buying gold. This is only slightly less than what is spent on health care and education.
Since India produces only a small amount of gold, the imports affect the country’s external trade balance. According to estimates of the New York Times, they are responsible for 30% of the current deficit. Restricting imports is not an option because nearly 2.5 million jobs depend on the gold production, directly and indirectly. Indian politicians consider it a solution to resale gold that had already been sold once, to melt it down and monetize it. Unsurprisingly, the gold buyers tend to differ. They have their reason for not storing their capital in a bank. Indian Finance Minister Arun Jaitley intends to answer this with a sensible investment project. At the beginning of May, he introduced a new gold account. The gold owners could pay in their gold and receive interest in return. The gold will be melted down and handed to jewelers who likewise have to open a gold account.
Previous attempts to bring similar ideas home to the people have been disappointing. That is why the government is now hoping that the Hindu temples will set a good example. Huge amounts of noble metal are kept there, sometimes for centuries. The treasures consist of votives pious worshippers donated to the gods, thanking them for making a wish come true. As early as 2013, the Indian Central Bank asked the temples for a valuation of their gold. That led to controversial discussions whether or not a votive should remain in the temple or be exploited to help the economy. Opinion is divided on this one. While some modernity-oriented temples auction the accumulated gold, others insist on keeping it in the temple as a consecrated good.
How big such treasures that add up over the course of centuries can be is illustrated by the Sree Padmanabhaswamy Temple. There, gold coins, diamonds and gold statues worth roughly 22 billion dollars have been found in a hiding place, and this doesn’t even include the cultural value.
This touches upon a fundamental problem of the plans of the Indian government. The Indians do not store their gold as ingots but as jewelry or other elaborately worked items. The objects may be cheap off-the shelf articles or creations of great artists. Many of the votives in the temples are cultural heritage linked to the identity of the temples’ visitors. Melting down centuries-old gold coins, precious jewelry and gold statues to counter the foreign trade deficit sounds a bit similar to what the conquistadores did when they assessed all works of Pre-Columbian goldsmiths by their weight only.
Besides, India is now facing the same question as the German-speaking area after the Reformation, in 1525: may a government act counter the express wishes of a voluntary donor? The Protestants said ‘yes’ and balanced their budget. The Catholics had the same arguments as the officials of the Hindu priests: “For thousands of years, Hindu society has donated this gold to temples whose trusts have safeguarded it“, said Vishwa Hindu Parishad joint general secretary Vyankatesh Abdeo, “Our wealth is in gold; the government’s evil eye is on this wealth. This is absolutely wrong, and we oppose this move. This wealth is God’s, not the government’s.”
Countless works of art had been destroyed during the Reformation, for the benefit of rulers and city governments. It remains to be seen who will prevail in India at the end of the day. Sharadchandra Padhye, head of the trust of the Mahalakshmi Tempel seems ready to fight when he says: “Let the bank come, let anybody come; we will not change our position. Who am I to melt these ornaments that have been given by the devotees with emotion?”
The New York Times and the Washington Post have published an article on this topic at the end of April.
An article written earlier can be read in Indiatoday.
The World Gold Council study as to why India needs a gold policy can be found here.
A summary of the official government policy is available here.
Of course, we already reported about the treasure in the Sree Padmanabhaswamy Temple.