In Gold we trust.

The Indian government wants citizens to declare any gold they possess. "Under the proposition made to Prime Minister Modi, the government plans to ask people with unaccounted holdings of the metal to declare it to tax authorities and pay levies, penalty,  the people said, asking not to be identified citing rules on speaking to the media." "Modi unveiled three state-backed plans in 2015 to try to tap the world's largest private gold stash of about 25,000 tons held by households and institutions to trim physical demand, and reduce imports by providing people with alternative avenues of investment." Most people were uninterested. They are doing this because direct tax collections fell short of revised estimate by Rs 1.42 trillion in the last financial year, ended 31 March. "The Goods and Services Tax (GST) collection and consumption of diesel -- the two weathervanes of economic health -- fell by 56% and 42% in the first two months of the current financial year compared to the same period a year ago due to nationwide lockdown." Since India does not produce gold the metal is imported from abroad. There is an import duty of 10%, plus GST of 3% on gold. There is a tax of 5% on making gold jewellery. Anything on which we pay tax cannot be illegal. However, high rates of tax encourage smuggling. Smugglers can train themselves to hide 800 grams of gold, worth Rs 3.1 million, in their rectums. Indians do not buy gold bullion. The vast majority buy gold jewellery from registered shops and cannot be held responsible if jewellers are using smuggled gold. Though unemployment level has come down from initial highs, loss of earnings due to the coronovirus pandemic has forced Indian families to rush to borrow money against their gold ornaments to take advantage of the soaring price of gold recently. Heavy handed slashing of interest rate by the Reserve Bank (RBI) has led to negative real interest rate, meaning savers are getting less interest than the loss of value of the rupee through inflation. "The growth shock to India's economy from the Covid-19 pandemic will trigger more weakness in the rupee, dragging it down toward an unprecedented 80-per dollar level," wrote Subhadip Sircar. A weaker rupee will reduce its buying power thus making our savings useless. People are now gambling in stocks to get higher returns. "Retail investor turnover in the first quarter of the current fiscal has shot up 78% from the year-ago period to Rs 33,731 crore (Rs 337.31 billion) in the cash segment. The number of demat accounts have also jumped by 2.9 million in January this year till May," wrote Clifford Alvares. This is not the time to invest in stocks, wrote Mohit Satyanand, but to invest in safe options. But the government has taken away all safe options. Perhaps the government wants to take over all the gold from Hindu temples offered by devotees. Quo vadis Hindutva? This is why Indians cling to gold. Because they have no trust.