To survive the Covid cash crunch, desperate Indians sell family gold.
Kavita Jogani delicately sets her wedding bangles on the shopkeeper’s scales in Mumbai’s jewellery mart, one of thousands of Indians parting with their most valued asset — gold.
Jogani was desperate after her garment business was severely harmed by numerous coronavirus lockdowns during the previous year and a half, making it difficult to pay store costs and the salaries of her 15 employees.
The headline growth figures imply that Asia’s third-largest economy is recovering from the economic catastrophe triggered by Covid-19, but the financial suffering for many Indians is far from over.
“I don’t have any other choice but to sell the gold,” Jogani explained as she nervously awaited the shop owner’s offer.
“I bought these bangles 23 years ago before my wedding,” the 45-year-old told AFP.
According to a report by Azim Premji University, business closures and job losses have pushed more than 230 million Indians into poverty in the last year, leaving many unable to afford rent, school fees, and hospital costs.
Their problems have been exacerbated in recent weeks by rising energy, petrol, and other commodity prices.
Many families and small companies in desperate need of cash have started using gold jewelry as collateral to seek short-term loans to help them get by.
According to central bank data, banks disbursed “loans against gold jewellery” worth 4.71 trillion rupees ($64 billion) in the first eight months of 2021, a stunning 74 percent increase year-on-year.
Many of these loans have gone bad due to debtors’ inability to make payments, forcing lenders to sell the gold at auction.
Notices for such transactions have been strewn throughout the pages of newspapers.
In India, gold is a valuable financial and cultural asset that is used at weddings, birthdays, and religious events, as well as a safe asset that can be passed down from generation to generation.
According to the World Gold Council, Indians purchased 315.9 tonnes of gold-use jewelry in 2020, about as much as the Americas, Europe, and the Middle East combined. Only China purchased more.
Indian households are believed to have 24,000 tons of coins, bars, and jewelry worth $1.5 trillion.
“It is the sole social security for a woman or any household because the government has no such social security program,” Dinesh Jain, director of the All India Gem and Jewellery Domestic Council, explained.
He explained, “Gold is like liquid cash.” The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.