The bullion reserve of a country is the indicator of the amount of wealth a country possesses. Bullion is defined as a bulk quantity of precious metals consisting of gold, silver and others that can be assessed by weight and cast as a lump. Bullion is valued by its purity and mass rather than its face value which is applicable in the case of money. India Bullion Market is a recognizable index that highlights the economic growth of the nation.
Bullion Purchase and Forex
In 2009, the government of India purchased 200 metric ton of gold from the International Monetary Fund (IMF) at $6.7 billion. This purchase has propelled the India Bullion Market to the tenth position among the top global gold holders. This purchase signals that the economy of the country has come full circle and is also a way of spreading its assets. The current foreign exchange or forex reserve of India is nearly $285 billion. The share of foreign currency in the forex is $268.3 billion, followed by gold at $10.3 billion, IMFs special drawing rights accounts for $5.2 billion while the reserve position in the IMF accounts for $1.59 billion.
Bullion in India
Trading of gold is known as bullion trading. India is the leading consumer and importer of gold in the world. Due to this, the potential of the India bullion market is very promising. Owing to the weak price of Dollar in the global market, the price of bullion is soaring. The gem and jewelry industry of India is one of the fastest growing sectors of the economy at an approximate rate of 15%. The India Bullion market is under the strict supervision of the Government as bullion is one of the major indicators of the wealth of the country.
India is the largest investor in gold jewelry as a large number of people believe that investing in gold is beneficial. The domestic consumption of gold depends on factors like the wedding season, festive season, the performance of the harvest and the monsoon of the country.
Indian Bullion Market Association
IBMA or the Indian Bullion Market Association is a national level body that represents the Indian Bullion Trade and Industry. This body is an association of all leading bullion dealers and jewelry merchants who have tied up with the National Spot Exchange Limited. The idea of this association is to promote a professional organizational dedication towards the development and growth of the bullion industry in India.
Problems of the Bullion Industry
There are a number of restrictions imposed on the import and export of gold as compared to any other commodities. The bullion market of the country is very fragmented and unorganized. The price of bullion varies very much in different parts of the country. The main reason for this is the lack of a benchmark that is valid throughout the country.