People offload gold as pandemic deepens financial pain
NEW DELHI: Paul Fernandes, a 50-year-old waiter in India, last year took out a loan using his gold as collateral to pay for his children’s education after losing his job on a cruise liner. This year, he is selling his gold jewelry to meet expenses, after failed attempts at starting a home business and finding another job.
“A gold loan is after all a debt that I am taking on,” he said from his hometown in the coastal state of Goa. “Selling my jewelry means I am not obligated to pay someone back along with an additional interest on that.”
With the pandemic pushing millions into poverty or bankruptcy, many Indians are now turning to their last resort: selling their gold jewelry to make ends meet. In rural India, the biggest bullion buyer, a brutal new wave of the virus has had a catastrophic impact on the economy and incomes. With fewer banks around, people in rural areas rely on gold in times of need as it can be easily liquidated.
Gross scrap supplies, which include old gold melted to make new designs, may exceed 215 tons and surge to the highest in nine years if a new wave emerges, he said. For a nation that imports almost all its gold mainly from Switzerland, higher local supply will also limit overseas inflows.
Many Indians who had clawed their way out of poverty face grim job prospects as lockdowns crippled the economy. More than 200 million have gone back to earning less than minimum wage, or $5, a day.
In an initial sign of stress among consumers, Manappuram Finance Ltd., one of the nation’s biggest gold loan providers, auctioned ₹404 crore of gold in the three months through March from loans that turned sour following a sharp drop in prices.
That compares with just ₹8 crore auctioned in the prior nine-month period. The jewelry was sold as Manappuram’s borrowers—typically daily wage earners, small time entrepreneurs, and farmers—couldn’t afford to repay the money.
In the south, the country’s biggest per capita consumer, about 25% more of old gold has been sold to jewelers, according to James Jose, managing director of Kochi-based refiner CGR Metalloys Pvt.
“After the lockdown, the shops are open and you can see very good footfalls in the shops for two reasons: one is purchases in relation to the wedding season and some amount of liquidation for cash,” Jose said by phone.
NEW DELHI: State-run oil retailers slashed diesel price by 16 paise per litre on Monday, the first auto fuel rate reduction since April 15 even as petrol became costlier by 28 paise, the 39th hike since May 4, a day after the results of five assembly polls were declared. Diesel prices dropped for the first time in three months while petrol became costlier by 28 paise.
The first diesel price reduction in about three months came after international benchmark Brent crude fell by $1.61 a barrel or 2.06% at the Friday close, compared to its peak of $77.16 last Monday. Fuel retailers align pump prices of petrol and diesel with their international benchmarks of previous day.
According to executives working in state-run oil marketing companies, companies have already recovered their past revenue losses on diesel like the one they suffered for 66 days from February 27 when rates were not raised because of assembly elections in four states and one Union Territory.
The revenue losses on petrol were higher compared to diesel, hence its saw a higher price surge in the last 70 days, they said requesting anonymity. So far, petrol prices have jumped by ₹10.79 a litre in 70 days, while diesel prices have jumped by ₹8.99 after factoring in first rate cut by 16 paise on the fuel.
Petrol is now priced at ₹101.19 per litre and diesel at ₹89.72 a litre in New Delhi.