Now Reading: Gold Controls Drove India’s Bullion Trade Underground
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Gold Controls Drove India’s Bullion Trade Underground
The Gold (Control) Act, 1968, restricted private ownership and trade in gold bars and coins as India sought to cut imports and conserve foreign exchange. It also limited goldsmiths’ holdings and capped…
The Story in Brief
The Gold (Control) Act, 1968, restricted private ownership and trade in gold bars and coins as India sought to cut imports and conserve foreign exchange. It also limited goldsmiths’ holdings and capped newly made jewellery at 14 carats. Times Now reports that demand remained strong, while many households preferred traditional, higher-purity gold linked to savings, stridhan and emergency finance.
The restrictions helped expand smuggling and a parallel market, with Mumbai becoming a major centre. Unofficial gold reportedly sold at premiums of 40% to 80% over London bullion prices. The Gold (Control) Repeal Act was passed on 6 June 1990. Soon after, during the 1991 balance of payments crisis, the RBI undertook a sensitive operation involving India’s gold as foreign exchange reserves fell to only a few weeks of imports.
The Indian Opinion
The lazy lesson is that all government control creates black markets, while the opposite claim says household gold can simply be shifted into banks. Neither fits the record. The policy ignored how gold served as savings, security and stridhan, but legal imports also carry costs when foreign exchange is scarce. The useful test is whether later rules can keep gold trade legal without reviving the smuggling premium that once reached 80%.
Source: timesnownews.com
This story was synthesised by AI from the source linked above.
