Since the Union Budget, gold has become costlier by 8-9 per cent because of a 2.5 per cent increase in import duty to 12.5 per cent and about a 5 per cent depreciation in the rupee.
The crop is currently trading at Rs 22 a kg compared to Rs 12.50 one month ago.
Forecasts of a further rise in bullion prices keep Indians away from selling gold.
Vegetable arrivals at mandis, especially in Maharashtra, have declined by more than 50 per cent since the beginning of the month.
They are now scaling or shutting down their businesses because they can't compete with untaxed grey market gold. India's gold smuggling has increased significantly since the import duty was increased in the Union Budget 2019 in contravention with the broader market expectations of a cut.
Consumers during the quarter sold 37.9 tonnes of old gold, which is the highest quarterly sale after September 2016, when old gold sale, or scrap supply, was 39 tonnes.
In order to help farmers, the government has increased minimum support price for the last several years. This has made Indian rice uncompetitive for exports.
With monsoon rainfall 16% below the long-period average, total sowing area is down by 7% at 56.7 million hectares so far this season.
Deficient rains in west, flooding in north play havoc with crop cycles.
With satisfactory progress of monsoon rainfalls prompting farmers to bring in additional area under basmati sowing, prices are set to fall lower going forward.
Large retailers are allegedly importing apparel made of Chinese fabric from Bangladesh at nil duty, under our free trade agreement with the latter country. However, the same agreement does not permit duty-free export from here.
Meanwhile, retail jewellery sales in India have declined by 50 per cent since gold price started its uptrend nearly two weeks. Buyers deferred their fresh purchase amid expectations of a correction in gold prices from the current high level.
Jewellery stores remained deserted as buyers deferred their non-essential purchases awaiting softness in gold prices.
At an average national price of Rs 90 a kg in the retail market, it shows a jump by 20% in the last two months.
Farmers in Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana anticipate a sharp decline in vegetable output this year, due to sustained declines in the water table after consecutive years of below-average rain. Prices of vegetables are expected to stay high for the next four to six weeks.
Large stocks were ruined in transit due to thunderstorm and rainfalls in the north and the north-east states, resulting in fewer kilos of potatoes at mandis.
Jewellers initially feared the ban applied on them, too. However, after discontinuing their monthly schemes for almost two weeks, they've started accepting deposits again.
As the shift from hand-crafted to machine-made ornaments did not serve the purpose, with neither the cost of machine-made jewellery declining nor jewellers finding innovative designs, the industry goes back to 'hand-crafted' ornaments for both domestic and overseas buyers, reports Dilip Kumar Jha.
Irrespective of the global movement, gold prices in India are nearing the level of Rs 34,000 per 10 grams in the physical markets.
In the retail markets, fresh onion is sold between Rs 10 and Rs 12 a kg. Now, farmers have to sell onion at a loss of Rs 2-3 per kg if transport cost is included.
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