Moreover, the wealth destruction is likely to have hit far more households than the damage caused by the big falls in equities as the number of households possessing gold is considerably higher.
After Finance Minister Nirmala Sitharaman announced a cut in gold customs duty in the Union Budget 2024, gold prices were heavily affected as it has fallen by a striking 5%. This abrupt drop means a staggering Rs 10.7 lakh crore was simply devastated from its aggregated value in a single day. When compared to the equity markets, this move caused the sixth-largest wealth erosion recorded so far.
Moreover, the wealth destruction is likely to have hit far more households than the damage caused by the big falls in equities as the number of households possessing gold is considerably higher. The fall in the cost of gold significantly impacts Indian families, known to be among the biggest gold owners worldwide.
According to a Money Control report, currently, Indian households account for approximately an eleventh of all gold reserves globally - a figure that surpasses the cumulative gold reserves of developed nations like the United States, Germany, Switzerland, and even the IMF.
Ever since the start of the year, gold prices experienced a notable surge, climbing by nearly 14.7 percent and outperforming the Sensex, which has only increased about 11 percent in the same time. But in July, MCX gold dropped around 5.2 percent.
During the Budget, the Finance Minister announced a reduction on Basic Custom Duty on gold and silver from 10 percent to 6 percent and Agriculture Infrastructure & Development Cess (AIDC) from 5 percent to 1 percent.
This new cut will have a substantial impact on reducing the overall tax load on gold, slashing it nearly by half from an estimated 18.5 percent (inclusive of GST) to just 9 percent.
Meanwhile, Gold traders were unhappy with the move to reduce the prices of the gold and began selling off their holdings, booking profits.
The recent decision was also not liked by the gold financiers. The devaluation of gold deeply impacts the overall worth and inevitably leads to a significant reduction in their loan-to-value (LTV) ratios. This leaves them in a financially unstable position.
The DNA app is now available for download on the Google Play Store. Please download the app and share your feedback with us.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Rs 10000000000000 wealth gets destroyed in just one day due to...")
)
)
)
)
)
)
)
)
)
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}