Drought affects gold biz; import may have dipped 90 pc in Aug

NEW DELHI: India's gold import may have slumped by 90 per cent in August despite the advent of the festival season, as high prices prevented people from buying the precious metal, especially after drought triggered fears of dent in rural income.

"Gold imports in August will remain within 10 tonnes as prices are ruling high at over Rs 15,000 per 10-gram level," Bombay Bullion Association Director Suresh Hundia told PTI. Gold prices were ruling at Rs 14,600 per 10 grams in the beginning of the last month.

India imported 98 tonnes of gold in August 2008, highest in a month last year, as prices fell leading to an escalation in demand in the build-up to the previous festive season.

However, as the country is now facing a double whammy of drought in about half the region and soaring food prices, demand for gold remained subdued, as people preferred spending on basic necessities to buying jewellery, according to Hundia.

Poor rains this year have raised fears of a slump in farm output affecting rural income, as over 60 per cent of India's population still depends on agriculture for livelihood.

Importantly, the import of gold this festival season (September-December) may not match the last year level of 146 tonnes if prices remain firm, Hundia said.

Gold was trading at Rs 15,050 per 10 grams for the October delivery on the country's largest commodity exchange MCX yesterday.