Gold has been all over the news in India lately because high and rising imports of the shiny stuff led directly to a deterioration of the current account, which in turn exacerbated the rupee's vulnerability over the past few months.
Three intriguing facts about India's gold imports (illustrated in the graphs) scream for an explanation.
First, the increase in gold imports has coincided with a sharp decline in financial savings.
Second, a predominant share of India's gold imports originates in Switzerland.
And third, there is a large discrepancy in India's gold imports from Switzerland: in recent research we have undertaken, we find that while India claims to import large amounts of gold from Switzerland (more than $26 billion), Switzerland reports that it shipped gold worth less than $6 million (yes, million, not billion) to India, resulting in a large unaccounted trade.
Text: Devesh Kapur, Marla Spivack, Arvind Subramanian & Milan Vaishnav, Business Standard