The rise is disproportionate to the consumption of the precious yellow metal in the domestic market and handicraft sector, thanks to the flow of huge volume of gold into informal market. [break]
According to Nepal Rastra Bank (NRB), gold imports skyrocketed by 151 percent from Rs 16.57 billion recorded in 2008/09 mainly due to rising outflow of gold to India and domestic black market. The government had reacted to the soaring imports of gold six months ago by raising customs duty on imports to Rs 470 per 10 gram from Rs 130 per 10 grams to put the price on par with the price in the Indian market. The government has also been adopting the policy of limiting gold imports - one of the major factor behind the burgeoning trade deficit.
Imports of silver too have shot up significantly by 176 percent to Rs 3.25 billion during the review year.
Traders have been maintaining that smuggling of gold to India in the initials months of the review year contributed to the significant rise in gold imports. Gold and Silver dealers also agree with the fact that imports of gold and silver skyrocketed in the last couple of yeas as the precious metals imported from overseas market enters into the hold of limited traders.
Commenting on the rise in gold imports, Bijaya Ratna Dhakhwa, president of Federation of Handicraft Associations of Nepal (FHAN), said alarmingly high gold imports through official channels were not in line with the domestic demand for gold. “The export of metal craft, where a large chunk of gold is consumed, has gone up only by about 12 percent over the last two years. This shows that the major chunk of gold made its way to black market and even across the border to India due to differences in prices,” Dhakhwa added. He also said demand from the handicraft sector has been fulfilled from gold smuggled from India.
“Cost of production of gold crafts is increasing due to increasing dependence on gold from the black market. That is why we are demanding the government to either allow us import gold from the overseas market or authorize use to issue purchase recommendations for our members,” Dhakwha added.
He said gold is mainly used in plating, painting, woodcarving and producing jewelry, statues and utensils. Dhakwha said handicraft production would be affected in the coming days if existing shortage continued any further.
Domestic gold dealers that purchase gold from designated banks have been supplying gold to handicraft producers. FHAN has been demanding at least 5 kg of gold and 100 kg of silver per day for handicrafts producers and exporters.
NGSAA, JGJA want gold allocated for Negosida
Two constituent associations of Gold and Silver Management Mechanism have demanded that they be allowed to procure gold lying idle at designated banks to smoothen supply in the market that has been paralyzed by the severe shortage of the precious metal at this festive season.
Issuing a joint statement on Wednesday, Nepal Gold and Silver Artists´ Association (NGSAA) and Nepal Gems and Jewelry Association (NGJA) asked to government to allow it purchase the gold allocated for Nepal Gold and Silver Dealers Association (Negosida).
Neogsida has not purchased gold from designated banks for more than two weeks.
Along with Negosida, Nepal Rastra Bank (NRB) had three weeks ago decided to designate NGJA and NGSAA to issue recommendations for gold purchase for their members. This had brought to an end the exclusive authority being enjoyed by Negosida.
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