New Delhi: The gold market in India is poised for a transformation as the Gem and Jewellery Council gears up to implement the ‘One Nation, One Rate’ policy to ensure that the price of the yellow metal is uniform across the country, eliminating the present variations in gold rates owing to differing state taxes.
Why do gold prices differ in different states?
Gold and silver prices vary from state to state due to different state taxes and other local charges. This discrepancy often forces gold buyers to travel to different cities to purchase the yellow metal for cheaper.
The ‘One Nation, One Rate’ policy aims to eradicate this inconvenience, offering consumers a standardised price for gold, no matter where they are in India.
How ‘One nation, one rate’ works for gold
The policy, proposed by the Government of India, aims to establish a national-level bullion exchange responsible for setting the price of gold. This system is akin to the stock market, where the price of shares is consistent nationwide, as listed on exchanges such as the Bombay Stock Exchange or the National Stock Exchange. Presently, gold and silver are traded on the Multi Commodity Exchange (MCX), but the new exchange will cater specifically to the bullion market, addressing a longstanding demand for such a platform.
Anas Rahman Junaid, Founder and Chief Researcher at Hurun India, highlighted that this initiative is expected to increase transparency within the industry. Jewelers across India will be required to adhere to the prices determined by the national bullion exchange. This will not only make gold pricing more transparent but also ensure that consumers can purchase gold at a uniform price, regardless of their location.
The new policy is set to benefit the general public significantly. For instance, if gold is more expensive in a city like Lucknow, residents currently have to travel to other cities where gold is cheaper for occasions such as weddings. With the implementation of ‘One Nation, One Rate,’ such practices will become unnecessary since the price will be standardised nationwide.
The pricing mechanism currently involves the bullion market association setting different rates for each city, which are typically announced in the evening. Prices are influenced by various factors, including global market sentiments and international prices.
This policy is expected to cut the price of gold due to increased transparency and reduced price discrepancies. It will also curb arbitrary pricing by jewelers and foster healthy competition among businesses. The jewelers’ organization GJC has conducted consultations with jewelers across the country, who have agreed to implement the policy. An official announcement is anticipated next month, in September.
India is poised to introduce the ‘One Nation, One Rate’ policy, standardising gold prices nationwide. This transformative move will enhance transparency in the gold market, eliminate regional price differences, and ensure consumers can buy gold at a uniform rate across the country. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
