Budget 2024: Drop in gold prices to benefit consumers & companies and tackle smuggling. But there is a catch
Indian Finance Minister Nirmala Sitharaman presented the Union Budget 2024 in Parliament on Tuesday, marking her seventh consecutive budget. Bringing cheer to consumers, she proposed a series of cuts on the customs duties levied on various items.
“My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness and simplify taxation,” she said in the Lok Sabha, highlighting the importance of respecting the interest of the public.
In the financial year 2025, several items are set to become cheaper and costlier. Have a look.
Items to become cheaper:
1. Cancer drugs
2. Gold, silver, platinum making charges
3. Leather goods
4. Fish and shrimp feed
5. Mobile phones, chargers
6. Medical x-ray machines
7. Equipment using solar cells, panels
8. Textiles
9. Footwear
Items to become costlier:
1. PVC flex banners
2. Imported telecom equipment
3. Ammonium nitrate
Nirmala Sitharaman listed out nine priorities for FY 2024-25 Union Budget:
1. Energy security
2. Infrastructure
3. Next generation reforms
4. Innovation Research Development
5. Productivity and resilience in agriculture
6. Inclusive human resource development and social justice
7. Manufacturing and services
8. Employment and skilling
9. Urban development
Also Read | Budget 2024: Purvodaya Plan to Boost Eastern India’s Growth
Budget 2024 ensures substantial drop in gold prices
The Indian Finance Minister announced on Tuesday an import duty cut on gold, silver and platinum. The total duty has been revised to 6% from the earlier 15% effective July 24. For platinum, the figure has dropped to 6.4% from the current 15.4%.
For gold and silver, the Basic Customs Duty (BCD) is cut to 5% and Agriculture Infrastructure and Development Cess (AIDC) to 1%, from the earlier 10% and 5%, respectively. For platinum, BCD is cut to 5% and AIDC to 1.4% from the previous 10% and 5.4%, respectively.
These cuts are expected to bring sizable drops in the prices of precious metals in the domestic market. The price of gold futures dropped 5.7% to Rs 68,600 per 10 grams; silver futures lost 4.7% to about Rs 85,000 per 1 kg in Tuesday evening trade on MCX.
Consumers and companies to reap substantial benefits
For jewellery, including the GST of 3%, the total tax used to stand at about 18%. This has been halved to 9%, in an effort expected to boost jewellery demand in the country. India is the second largest consumer of gold after China.
The timing of the drop in precious metal prices could not have been better as the festive season approaches. On Tuesday, the price of 24 carat gold in Mumbai stood at Rs 7,180 per gram. Experts believe the price could drop by Rs 300 to Rs 500 per gram in the near future.
Companies are also set to benefit. Reflecting the potential benefit of increased revenue and profits, the stocks of listed jewellers such as Senco Gold and Titan Company appreciated 4.8% and 6.6%, respectively. Besides, gold smuggling could also decrease.
But Budget 2024 seems to have a catch
Increased demand can lead to higher imports of gold – the third largest component in India’s import basket. But this is not a good development for the Indian currency – still hovering near an all-time low against the US dollar. Gold constitutes about 8% of total imports.
