India’s gold market in the context of reform & growth, the World Gold Council said recently that, Rural India is the largest consumer of gold jewellery! Despite urbanisation and migration to cities, two-thirds of India’s population are rural dwellers. But this figure is falling. In the last decade alone, the number of people living in rural India has dropped from 69% to 65%, which loosely translates to nearly 50mn people migrating to urban areas.
For decades, gold has been the focal point for investment across many rural communities, in part due to a lack of awareness and penetration of banking products and services. Over the last decade, however, successive governments have focused on financial inclusion and banking services have become more widespread in rural areas. Nevertheless, despite this better access to bank accounts, gold remains the main investment choice and rural India’s gold demand has only dropped by a few percentage points over the last few years – from 60% to the current 55-58%.
On the one hand, rapid urbanisation and erratic monsoons have impacted demand in rural India, but on the other, urbanisation in small towns has led to inward investment and rising land prices, which in turn has led to rising incomes.