The importance of gold in Indian marriages starts from the premise that the mangalsutra or taali that the groom ties to the girl should have the holy pendant made of gold, along with, of course, the black beads. The worth of a man is judged in Indian families by the gold he buys for his woman. As greed of families keeps rising, in marriages, the worth of the girl’s family is judged by the amount of gold that they can give the girl.
This deeply symbiotic relationship between gold and marriages is now getting seriously disturbed in Bangalore, thanks to the spiralling price of the yellow metal. The additional one percent Value Added Tax (total two per cent) on branded gold jewellery proposed in the Union Budget 2011-2012 has only added to the woes of the girls’ parents, although jewellers aren’t too concerned as they would be passing on the burden to the buyers anyway, and they are also aware that the demand for the metal would not come down even if the price rises.
“The volatility of the price of gold is not much of a bother to jewellers. However, the one per cent increases in VAT (total of two pc) might cause some ripples in the gold jewellery market which will surface only by June-July,” says Ashok Kumar D Jain, Manager Navrathan Jewellers Pvt. Ltd.
He terms as “sensible” those parents who have daughters, and start investing in gold right from the birth of their child. Such parents, he notes, start accumulating small amounts of gold in the form of coins, earrings and sell them at the time of their daughter’s wedding.
Jain might just be reflecting on the reality without making any value judgements. After all, in the Indian tradition, irrespective of the religion, gold ornaments has been given utmost importance especially during marriages. Gold rings are exchanged during engagements. Even in Muslim and Christian weddings, the bride is decked with gold ornaments.
But despite the rise in gold prices, families preparing for marriages have no choice. “I am paying a monthly premium at one of the jewellery shops where I can buy some gold at the end of 12 months. This way, I am collecting small amounts of gold which can help in the future, for my daughter's wedding,” says Nagaraj, father of a teenaged girl.
For Krishnamurthy, whose daughter’s wedding is a few days away, purchase of gold is a sound investment decision. “We don’t mind if the gold prices are high. What matters is our daughter's wedding and her happiness. Investing in gold is always good because you only gain out of it and never lose,” he contends.
“Gold is associated with religion in our country. And, it is every man's investment option, since it comes to one's rescue especially during marriages,” says S Venkatesh Babu, secretary of Bangalore Jewellers' Association.
But the one per cent additional VAT has a different dimension.
Elaborates Babu: “The additional VAT will definitely affect the jewellers in Bangalore. VAT will make buyers go for purchases without proper bills thus inviting a lot of black money into the gold jewellery market. Kerala, Tamil Nadu and Andhra Pradesh have lower VAT and we fear that the gold buyers might look to buy gold from other states.”
However, the small time jewellers selling unbranded ornaments say that the two per cent VAT will not make any difference, since the buyers will not try to bargain to get the bill amount reduced.
But Sarath Kumar from Tayi Jewellers on Avenue Road, says the VAT will affect them. “Normally, the buyers who come here are our regular customers who have faith in us, and have developed a bond over the years. Unaware of the additional VAT, they try to haggle. We are forced to adjust the price by charging less for labour to retain the customers,” he says.