Recycle gold to curb import

Gold price first touched four figures in October 2009 at an average of $1,040 for one troy ounce (about 31.1 gm). It kept on soaring - peaking at $1,813.5 in August 2011, as per the World Gold Council. However, gold price has since been falling, barring some minor temporary upward movements in the international market. The significant price correction goes in favour of gold loving Indians.

According to a recent report, the Indian women hold more gold than the US treasury. Indians' love for the yellow metal only adds credibility to the report.

No wonder, at nearly 1,000 tonnes annual consumption, India figures among the top gold importers, as the country hardly mines its own reserve of the precious metal.

Given the craving for gold Indians have, it would remain in demand even if the government bans its import. That will only encourage smuggling, which has been going on for decades.

Value wise, gold happens to be the most imported item after crude oil, as both jointly skew Indian foreign trade against the overall exports from the country.

The rapidly widening current account deficit (CAD) forced the previous UPA regime to take some harsh measures to contain it, which included sharp increase in import duty on the yellow metal. It was, however, still a wise move to hike the duty rather than impose a blanket ban on gold import.

Here's why import of gold should not be banned:

1. Social value of gold

Owning gold has been considered as a status symbol of Indians for ages. People buy it on certain festivals and other auspicious occasions. It is also considered as the best financial security given the ease of its liquidity.

2. Rise in smuggling

Since gold is so valuable to Indians, it will be really difficult to persuade them not to buy it. It will only aid to illegal trade of the commodity. It is better to hike the custom duty, if it becomes inevitable, than impose a blanket ban on its import. Otherwise, we might see new generations of Haji Mastans and Dawood Ibrahims coming up to fill the demand-supply gap.

3. Pressure on jewellery industry

A good portion of imported gold is processed and exported to various countries to cater to the demand for Indian jewelleries. In fact, the gems and jewellery industry contributes around 15 per cent to the country's overall exports. However, a limited or non-availability of the precious metal will throw a huge challenge to the jewellers for fulfilling demands in overseas as well as domestic market. The ban would destroy the thriving jewellery business, which provides jobs to millions of people.

4. Impact on foreign trade

Ban on import of a certain item might lead to the export of others from India as it is likely to invite some retaliatory action. The step might draw criticism of international bodies like World Trade Organisation and India could be seen as an unfavourable destination for investors.

5. Stabilising gold price

According to the World Gold Council, from the peak of $1813.5 in August 2011, price of gold has fallen significantly to $1260.25 per troy ounce at the end of January 2015. The significant price correction gives the government no reason to ban the import of gold.

6. Improving forex reserve and CAD

The Economic Survey 2014-15 expects the current account deficit to fall below 1 per cent in the coming fiscal on the back of easing prices of some commodities, including crude oil and gold, from the peak of 6.7 per cent of GDP in the third quarter of 2012-13. India also has fairly high reserve of foreign exchange, which has steadily been on the rise over the years. So, for now, the condition does not justify a ban on import of gold.

Instead, it was only prudent on part of the current NDA government to come out with its innovative ideas to extract the massive gold reserve, estimated to be more than 20,000 tonne within India. The government's gold monetisation scheme is expected to allow recycling of the metal lying idle in bank lockers, chests of rich temples and individuals' vaults.

If implemented properly, the gold monetisation scheme, coupled with the launch of gold accounts, might prove to be a better way to curb import than the last government's decision to hike import duty.

Though Finance Minister Arun Jaitley decided to keep the custom duty at record high in his first full-fledged Union Budget, his proposed amendments should see a drop in import of the precious metal and allow him to reasonably lower the duty in future.

JDU, HJC, Shiv Sena... Is BJP going to SAD-den Badals next?

I remember a report published in a leading daily, based on an astrologer's prediction that Narendra Modi would serve as the Prime Minister of India for two terms. The prediction might have been made before the 2014 General Elections were over, but the report appeared after the results were already out. So, the genuineness of the prophecy remains to be verified and it would be known after the next Lok Sabha polls only.

But it appears right to me also because the same astrologer had also predicted that the regional players, which have been playing crucial roles in government formation irrespective of the coalition in power - United Progressive Alliance (UPA) or National Democratic Alliance (NDA) - and often resorting to blackmailing tactics to get what they want, would gradually become irrelevant.

Again, the extent of truth in the second prediction cannot be checked immediately. But it seems to be in the process already.

Though both UPA and NDA have been witnessing entry and exit of various regional parties, the practice seems to have intensified ahead of the assembly polls in Maharashtra and Harayana.

JDU walks out of NDA

For the ruling NDA it started last year, much before the general elections, with the Bharatiya Janata Party's old partner Janata Dal (United) parting ways, apparently over the ego clash between the parties' respective poster boys Narendra Modi and Nitish Kumar respectively.

BJP slams door on HJC

The BJP roped in a number of new allies in the run up to Lok Sabha polls. Haryana Janhit Congress (HJC) was one of those allies. But it failed to win any seat and the BJP decided to dump it before Haryana Assembly elections rather than conceding to the its "weak ally's" demand for too many seats.

Sena bids BJP adieu

The BJP's oldest ally - Shiv Sena - was the next to leave the bandwagon as its chief Uddhav Thackeray decided not to compromise with his chief ministerial aspirations after days of failed negotiations with the BJP.
Though the BJP has kept the option of post-polls alliance open (though officially denying it) by refraining from attacking the Maharashtra-based party, the latter has been unforgiving in its attack on the friend-turned-rival party. In fact, the Sena's attack on the BJP, at times, is harsher than on its two other main rivals Congress and Nationalist Congress Party (NCP), probably fearing to lose too many seats to it.
Keeping aside his ego, the Shiv Sena chief has even hinted an alliance with estranged cousin Raj Thackeray's Maharashtra Navnirman Sena (MNS).

Ironically, the MNS was fallout of Uddhav's political aspirations as Raj was largely seen as the true successor to his uncle Balasaheb Thackeray - the founder of Shiv Sena. Moreover, the hopes of MNS joining the NDA in the run up to parliamentary elections were shattered by the original Sena, which was strongly against any tie-up with Raj.

Bad SAD

After doing it in the Lok Sabha polls, the Shiromani Akali Dal (SAD) has been repeating it in Haryana Assembly elections by choosing to campaign in favour of Indian National Lok Dal (INLD) candidates and attacking the BJP in the process.

The Akalis happen to be the original NDA constituent along with the Sena and the JDU, which are no more parts of the coalition. Despite BJP's repeated warnings not to support the INLD, SAD has been ignorant as the Badals show their commitment towards their old friends - the corrupt Chautalas.

The BJP has now fielded Navjot Singh Sidhu, who was denied ticket for parliamentary election from Amritsar at the behest of the Badals, to neutralise the SAD challenge in Haryana.

It would not be a surprise if the BJP snaps ties with the Akali Dal as the next step on the grounds of betrayal. Accusations of being radical and corrupt might act as the catalysts to the end of BJP-SAD tie-up.

In, out, in... out?

The general elections also saw return of two of the BJP's former allies - Ram Vilas Paswan's Lok Janshakti Party (LJP) and N. Chandrababu Naidu's Telugu Desam Party (TDP) - to the NDA.

Though Paswan had insisted that this time he would not exit the NDA, how long he stands by his words remains to be seen. Even the BJP might find it a burden when it comes to fighting the corruption taint given the unconfirmed charges against the Bihar leader. Even an opportunist Naidu's alliance with the saffron party cannot be considered very strong.

Depleting UPA

The UPA too has seen many exits, which started well before the Lok Sabha polls. Trinamool Congress and DMK walked out of the coalition foreseeing the UPA's bleak future. While the Trinamool emerged more powerful after the break-up, DMK suffered badly.

Pawar punch

As in the NDA, UPA too suffered a major blow ahead of the Maharashtra Assembly polls when Sharad Pawar's NCP walked out of it. The dream of becoming Maharashtra chief minister saw the NCP supremo's nephew, Ajit Pawar, ending nearly 10-year-old alliance soon after Shiv Sena and BJP ended their relationship.

Irrelevant BSP

The BJP gave Uttar Pradesh's both the strong regional parties - Samajwadi Party (SP) and Bahujan Samaj Party (BSP) - a heavy blow in the Lok Sabha polls. While the BSP failed to open its account, the SP just managed to win its pocket-borough. The state's ruling party, however, improved its performance winning more seats than the BJP in the crucial assembly by-polls recently.

BJP versus Congress in 2019 polls?

Coming back to the prediction, the ups and downs in the UPA and the NDA gives strength to the likelihood of a two-party contest in future parliamentary elections, making the regional players more or less irrelevant in the national politics.
Though it might not sound that democratic in the world's largest democracy, but should be in the interest of the nation as the ruling party at the Centre would be saved from the arm-twisting tactics, often adopted by the regional allies. And, at least the BJP looks to be preparing itself well for it.

'Great Wall of Tibet' separates China and India

Chinese President Xi Jinping must have returned home with some unique (if not fond) memories, as well as some bitter, after his three-day India visit.

The trip, which started amid media speculations that Jinping would outdo Japanese regime’s commitment for investment to the tune of $38 billion in India, began in Ahmedabad with Prime Minister Narendra Modi ignoring protocols to welcome arguably the world’s most powerful leader in traditional Gujarati way in the land of Mahatma Gandhi. All through the Chinese leader’s visit, there were protests by Tibetans, who have been living in India as refugees for years. A group could achieve some success by breaching the security cordon as it tried to barge into the Hyderabad House in New Delhi while the one-to-one and delegation level talks were on.

Demanding independence is their right. But why at the cost of India, which has been sheltering over 150,000 Tibetans in exile for decades?

Even as the border disputes in Jammu and Kashmir and Arunachal Pradesh are often seen as the immediate provocation for the escalation in tension, diplomatic experts agree that Tibetans residing in India is the key reason behind the bitterness of its relationship with China.

The protests hogged the limelight despite the fact that the exiled Tibetan spiritual leader Dalai Lama called Jinping an open-minded and realistic.

The Dalai Lama

Shouldn’t the 79-year-old Buddhist monk, who has been honoured with the Nobel Peace Prize 25 years ago, have appealed to his followers not to resort to the tactics that they did?

I have great respect for the Dalai Lama and sympathy towards the Tibetans who have been struggling for independence. But a visit to Dharamsala town in Himachal Pradesh, which is very much a part of India (and there is no boundary dispute over it with China or Tibet), a few years ago was an eye-opener to me.

Dharamsala is considered one of the biggest refuges for the Tibetans in exile in India with the 14th Dalai Lama himself having his abode in the McLeod Ganj suburb. But it was shocking to find that the Tibetan eateries or road side vendors would rather prefer not to entertain Indian customers as they looked forward to foreigners who might be the potential high spenders.

My experience reminded me of an Amitabh Bachchan blockbuster in which the villain says "dogs and Indians are not allowed" inside a club.
Had it been outside India, probably it wouldn't have hurt me so badly, but discrimination in India for being an Indian was a rude shock to me and the fellow visitors.
Coming back to the Tibetan agitation and about 70-year-old movement, the protesters shouted slogans against the Chinese president and urged the host prime minister not to hold talks with the former.
The protests, which were witnessed in various parts of the Indian capital, especially the areas dominated by Tibetans and the places visited by Jinping, do not conform to the comparatively softer stand taken be the Dalai Lama.
It is time India should make it clear that no community should take undue advantage of its liberal behaviour and cause it an irreparable loss.
Of course we still stand by our age old tradition of "atithi devo bhaw (a guest is like a god), but that doesn't allow the guests freedom to dent the host's own interests.