Industry Fears over Modi's "Don't Buy Gold" Plea

(IDEX Online) - India's Prime Minister Narendra Modi has called on the country's 1.4 billion people to stop buying gold for a year, as part of a broader austerity program.

The jewelry industry warned the move could dent sales and threaten millions of jobs.

Speaking at a rally in Hyderabad on Sunday (10 May) Modi said cutting expenditure on gold - as well as fuel and foreign travel - would conserve foreign exchange reserves at a time of ongoing tensions in the Middle East, surging oil prices and other global uncertainties.

"There was a time when, during a crisis or war, people would donate gold for the country," he said.

"Today, there is no need for donations. But for the nation, we must decide that for one year, we will not buy gold jewellery at any function or event. We will not buy gold. To save foreign currency, our patriotism is being challenged."

Shares in two of India's biggest jewelers, Titan and Kalyan fell 7% and 9% respectively on news of Modi's plea.

Rajesh Rokde, chairman of the All India Gem and Jewellery Domestic Council (GJC) warned the move would put pressure on 10 million jobs linked directly and indirectly to gems and jewelry.

"India already possesses thousands of tonnes of idle household gold," he said.

"The solution may not lie only in reducing demand, but also in unlocking the immense value of existing gold through a transparent and regulated Gold Monetisation Scheme."

Screengrab shows Prime Minister Narendra Modi at the rally in Hyderabad.