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No Festive Boost for India Gold Buying After 'Pitiful' Q1

Gold buying in former No.1 consumer worst since 2009 global financial crisis...
GOLD BUYING by households in India failed to rise ahead of today's Akshaya Tritiya festival, dented by high Rupee prices and recent changes to tax regulation, according to leading retailers.
Seen on some Hindu and Jain calendars as an auspicious occasion for buying gold – a key element of Indian household savings – Akshaya Tritiya has been heavily marketed by the jewelry industry over the last dec ade, and now comes second only to the post-harvest festival of Diwali as a peak for gold demand in the world's former No.1 private consumer, now behind China.
But in 2016, "footfalls have been low ever since we opened shops after the 42-day long strike ended," says one Gujarat jeweler, referring to the industry's failed attempt to reverse a new 1% sales tax, imposed on gold items by the government's 2016 Budget in February 
"The high gold prices are also playing spoilsport," he adds, with Rupee prices holding near 2013 levels, well over 10% above Akshaya Tritiya 2015.
"Sales are lower due to high prices," agrees Gitanjali Group (NSE:GITANJALI) chairman and managing director Mehul Choksi, "[but also] other disruptions like mandatory requirement of PAN card for transaction above 2 lakh Rupees."
Presenting a Permanent Account Number (PAN) for tax reporting and tracking was made mandatory for all purchases over Rs 200,000 (currently equivalent to US$3,000) on New Year's Day 2016
Indian demand was "pitiful" in the first 3 months of the year, according to specialist analysts Thomson Reuters GFMS, "with jewellery consumption down 56% and net disinvestment for the first quarter in seven years." The imposition of that new 1% sales tax on gold in February's 2016 government Budget proved "a crucial factor", sparking the nationwide strike ended last month as Akshaya Tritiya approached.
Besides buying gold for gifts and religious observance, some 16% of Indian adults use gold as their "top" savings vehicle, according to consultancy Financial Inclusion Insights, with 64% using cash held at home as their primary form of savings instead.
In contrast to traditional outlets and workshops, major online retailers report a strong rise in gold jewelry demand on last week's run-up to today's festival.
"Compared to last year, we see over six times growth in sales in our Akshaya Tritiya offerings," says fashion category leader Mayank Shivam at US-listed retail giant Amazon (Nasdaq:AMZN) to the Financial Express.
"In terms of traffic, we have grown over 100% compared to last year."

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