This is an editorial by Mr. Rakesh Wadhwa in response to an article authored by Jug Suraiya and published on June 11, 2013 in the ‘Juggle Bandhi’ section of the Times of India. You may read the article here.
In TOI of June 12, Jug called the Indians “blinking idiots” for their love of gold. He went on to lament how this investment could be more productively channeled into industry and business growth. He calls this gold demand “totally illogical and toxic fixation”.
Normally I agree with Jug’s articles and have called him several times and appreciated what he has written. Today’s article is different. He just doesn’t get it. He is saying Indians buying gold are foolish. By what right? Each individual decides what is a good investment for himself. You and I decide whether we want to put surplus money into gold, silver, shares, fixed deposits,business venture, land, house or whatever else is important for us. If – when the demand of you and I is summed up – and it shows that gold is being purchased in increasing quantities, it doesn’t make us all into “blinking idiots”.
It just indicates that there is shortage of other investment opportunities for us. Who is to blame? On the very same page of TOI, another editorial titled “Arrest that Fall” provides the answer. It asks the government to unleash another round of reforms to halt the rupees slide – that is indeed the real problem which needs to be solved, not you and I buying gold. If we want a strong rupee – and of course we do – as it means all of us are richer. A weak currency means our imports are costlier; our money buys less and less abroad, so travel becomes more expensive and also it means that our rupee buys less and less at home too. Almost all of us lose big time, though a few who export may gain.
What will strengthen the rupee? Simple, more demand for it. What can create this demand? Policies which make it easy to invest in India. Make India an attractive destination for investment and money will flood India from abroad and also make it attractive for Indians to invest here in business instead of taking money abroad or, yes, buy gold.
What will make India an attractive destination for investment? Government policies which have stalled project after project need to be changed. Environmental clearances alone are holding up 1,40,000 crores worth of projects. Several billion dollars which would have come to Orissa for iron & steel mining and manufacture have been awaiting clearances longer than this government has been in power.
Government haltingly opened up investment in retail and soon came up with myriad conditions and Ikea which was to bring 10,000 crores as investment said no. Then government agreed to revise those conditions. The TOI article says “government could begin by easing foreign investment restraints in retail, insurance, pension funds, defense, energy and other sectors.” Yes the government needs to do that and the time is now.
What is hampering international investors is hindering us Indians as well. It takes ages to get licenses, permits and permissions. India continues to be at the bottom of the heap of nations as far as ease of doing business is concerned. Buying real estate and developing it, is a nightmare.
Those of us who buy a house or an apartment do not realize the kind of hoops a developer has to jump through to bring a housing project, a mall or a hotel into existence. Construction of a hotel and operating it requires licenses which number over a hundred. A school needs nearly as much, plus has to be a non-profit undertaking.
So where and how does an Indian invest his money? Some buy gold Jug.
Here’s a scanned copy of the article by Jug Suraiya