Gold gold gold, they just gotta have that gold;
Gold gold gold, gotta have McKenna’s gold.
Thus went the song by Jose Feliciano in the film McKenna’s Gold. It captures the ardour that gold induces in humans perfectly.
No one quite knows how much gold there is in India. Estimates start with the 4,000 tons that are with the temples alone. The Mangal Sutra made of gold alone is a major single attractor of gold. There are around 10 million marriages in India annually and if even half of them involve a 10 gram Mangal Sutra, it works out to 50 tons, that too per year. And there are other sources of demand as well. So, it all adds up to a virtually bottomless sink for gold.
This book has nine essays in addition to the comprehensive Introduction by Chakrabarti. Between them they cover nearly everything that has to be said about gold demand in India, which, as we can see, is humungous.
Harriss-White points out how the possession of gold is a private virtue and a public sin in India. There is thus a huge divergence between what motivates people on the one hand and the state on the other. Had I been asked to contribute a chapter I would have compared gold and alcohol in India because demand and regulation are nearly identical in nature. There are three important differences: gold is almost entirely imported, and the alcohol is almost wholly made in India. Second, gold is mostly cherished by women and alcohol by men. Third, while alcohol is a major source of revenue for Indian governments, gold constitutes a huge source of leakage of very scarce foreign exchange. Almost all of Harriss-White’s dismay with India and gold and government policies can be explained by the second and third factors above.
Bazel Sheikh used to work for the Reserve Bank of India and has, therefore, had a closer encounter with the problem for central banks that is gold. He addresses an important contemporary issue, namely, why have central banks started accumulating gold once again after having dumped it for close to half a century. The answer is exactly the same as for individuals: gold is a store of liquid value that can be used at will. The US policy of sanctioning countries has introduced a new category of risk which the IMF calls ‘sanctions risk’. This has given a fillip to central bank gold demand. Sheikh dismisses, for excellent reasons, the idea that central banks might be veering toward a reintroduction of the gold standard. Be that as it may, the fact remains that all economically important countries have been adding furiously to their gold reserves, which is why people are beginning to talk and wonder about what’s going on.
G Sreekumar’s essay deals with gold as a factor in money laundering which means cleaning the proceeds of crime. He says, in a heroic assumption of causality, that the high demand for gold in India leads to crimes in other countries. One must assume China, too, is responsible here because since 2009 its gold demand has exceeded that of India. On the whole, this is a comprehensive but somewhat unimaginative chapter covering the role of gold in money laundering. But one gets the sense that on an overall view it is a marginal factor which, moreover, makes people feel better even if the state feels worse.
The chapter on gold jewellery making by Sruti Kanungo and Anandita Chakrabarti tells us about the eternal problem comprising the conflict between factory made things and their impact on traditional labour-intensive manufacturing. The chapter also describes the production and distribution networks that dominate the informal market and are extremely resilient. A word about the honesty of the practices in informal production would have been very useful. After all, how many people know anything about the purity of the gold jewellery on offer?
There are four other essays on the micro aspects of gold, by Madhuparna Nayak and Anindita Chakrabarti, Nithya Joseph, Isabelle Guérin, G Venkatasubramanian, Elena Reboul, and by KC Mujeebu Rahman, Anindita Chakrabarti respectively. The economic, social, sociological, political and moral aspects of it are all covered, albeit in a slightly confused mix of data and opinion. An analytical framework would have been helpful in understanding the many issues involved.
The last chapter, however, is an intriguing one. It is a two decades-old essay titled ‘Good as Gold: Love, Security and the Limits to Conjugality’ by Geetha V. It is about women and gold. I couldn’t understand what it was trying to say. The fault must be mine.
TCA Srinivasa-Raghavan, columnist with the Business Standard, is the author of Dialogue with the Deaf: The Government and the RBI (Westland, 2017), Politics by Other Means: A Brief History of Indian Budgets (Kindle edition, e-book) (Westland, 2018) and co-author of All the Wrong Turns (Amazon, 2019).