Mumbai: In Mumbai’s jewellery bazaar, Kavita Jogani gingerly places her wedding bangles on the shopkeeper’s scales, one of the thousands of Indians parting with their most cherished asset – gold.
It was not an easy decision – Jogani was desperate after her garment business took a severe hit in the past year and a half with multiple coronavirus lockdowns, making it difficult to pay shop bills and the salaries of her 15 employees.
The headline growth numbers suggest Asia’s third-largest economy is rebounding from the economic crisis unleashed by Covid-19, but there is no end yet to the financial pain for many Indians.
“I don’t have any other option than selling the gold,” said Jogani.
“I bought these bangles before my wedding 23 years ago.”
Business closures and job losses pushed more than 230 million Indians into poverty in the past year, according to a study by Azim Premji University, leaving many struggling to pay rent, school fees and hospital bills.
Their difficulties have been compounded in recent weeks by soaring prices for electricity, fuel and other items.
Desperate for cash, many families and small businesses have been putting up gold jewellery – their last resort – as collateral to secure short-term loans to tide them over.
Banks disbursed “loans against gold jewellery” worth 4.71 trillion rupees (RM259bil) in the first eight months of 2021, a whopping 74% jump year-on-year, central bank data showed.
Gold has immense financial and cultural significance in India – it is considered essential at weddings, birthdays and religious ceremonies, and also seen as a safe asset that can be transferred from one generation to the next.
Indian households are estimated to be sitting on 24,000 tonnes – worth US$1.5 trillion (RM6.2 trillion) – in coins, bars and jewellery.
“It is the only social security for the woman or any household because there is no such social security programme from the government,” said Dinesh Jain, director at the All India Gem and Jewellery Domestic Council.
“Gold is like liquid cash,” he said.
“You encash it in at any time of the day and night.” — AFP