Over the past year P. Chidambaram, India's finance minister, has been fighting his country's insatiable appetite for gold. The world has watched him plead, scold and lecture Indians – especially bankers – on the importance of not importing excessive amounts of the yellow metal.
But based on the latest trade figures, his efforts have fallen on deaf ears. In July the country bought $2.9 billion worth of gold – an increase on June figures. With the festival season ahead these numbers are unlikely to drop any time soon. According to some estimates, Indians are also hoarding bullion – close to 20,000 tonnes worth about $1 trillion.
But it's not that Chidambaram has something against the precious metal itself. Rather, he fears its corrosive powers on the country's balance of trade. As exports drop and imports rise, India's current account deficit grows larger and larger, devaluing the Rupee.
See also Reuters' Timeline: India's efforts to curb gold imports