India’s gold stockpile, Kerala’s gold rush

-->

It is well-known that private gold holdings in India are colossal. Government stock is (according to September 2008 figures) 357.7 tonnes or 3.1% of the country’s forex reserves (http://en.wikipedia.org/wiki/Official_gold_reserves). This is comparatively very low. The value keeps changing depending on the fluctuations of the Indian Rupee-US Dollar parity.

But privately held gold in India is estimated at 50,000 tonnes! (Business Line http://www.thehindubusinessline.com/2009/01/16/stories/2009011650260800.htm). The country could be gold bankers to the world!

The Business Line report reminds us that S. Venkataramanan, the then Governor of the Reserve Bank of India (RBI) had mooted the idea of a Gold Bank way back in 1992 and the then Finance Minister Manmohan Singh had included the proposal in that year’s Central Budget. But a senior official of the RBI shot down the scheme. If implemented, it could have harnessed at least a part of this silent wealth for more meaningful use.

Annually, 700 tonnes of the yellow metal is sold in the country, according to P. Kishore in his column ‘Business Boom’ in today’s Malayala Manorama.

Who buys it?

Kishore says 17% of the gold is gobbled up by the tiny State of Kerala which accounts for about 3% of India’s population. That works out to 119 tonnes of gold. A sovereign coin is 8 gms. The arithmetic is simple. The people of Kerala buy about 15 million sovereigns a year or about half a sovereign per head.

A sovereign costs about Rs.11000 these days!

Good investment? I suppose so. But how many can afford?

Also see  

Old Kerala Jewellery

Kerala: Left with empty granaries

Vanishing haystacks

‘He lay down with the bottle in one hand. After a while he heard the harvest song. It came from a distance but with great clarity. The music was back, carrying the pulse of nature with it. People cared after all. The granaries would fill. Haystacks would rise towards the sky. There would be dancing and games and merrymaking. “Hurry, Neeli, we’re late,” he called out and sat up.’

That is from a short story, ‘Morning after the storm’ (http://abrahamtharakansblog.blogspot.com/2007/04/morning-after-storm-part-1.html).

Once upon a time, haystacks reflected prosperity. The paddy fields would be readied and sown before the rains. In a few months time the crop would be harvested. After threshing and winnowing, the paddy would go into granaries. And the land would dot with haystacks. That was how it was, till recently.

Now the situation is different. Large tracts of rice fields lying uncultivated are a common sight in Kerala today (see: Un-ploughed lies my land ). Many of those who still maintain cows and cowsheds have to buy hay at high prices. The haystack at Olavipe in the picture above is made with bought material.

Does this mean there is less prosperity now? Not really. Generally speaking, people better off today than at any time in the past that I can remember. This morning I found number two-wheelers at the local church. A decade or so back the vehicle population was limited to half a dozen bicycles.

Most people have jobs now. They eat regular meals, dress better, send their children to good schools. It is not at all surprising that the youngsters prefer to work elsewhere and not in the agriculture field. They can afford to buy rice with their earnings.

That too is progress.

Ends.

Photo by me. Click on it for enlarged view.

Also see: Kerala: Left with empty granaries

Kerala economy: The NRI money pile

This post is inspired by an article on NRI remittances to Kerala in the Malayala Manorama of December 27. The thought provoking piece is written by C Sarathchandran who is Advisor to the World Bank – Indian Operations. You could possibly access it on Manorama Online.

The writer points out that 1.8 million Keralite NRIs (Non-Resident Indians) who work in other countries without the pressures of the political ideologies that plague their home state remitted Rs.64,400 crores in 2006. How much is that in US money? $16.1 billion? The estimated income in the current Kerala budget is only Rs.21,000 crores!

What happens to this colossal amount? Only a fraction of it is used in the state and the rest goes to other parts of India. The explanation for this is the dearth of bankable projects in Kerala. Why is it so? One reason is that Keralites generally lack entrepreneurship. They are still oriented towards land and in building fabulous houses with their hard earned money.

The second reason is that most Keralites do not feel secure about investing in industrial ventures in their State. The major contributing factor for this apprehension seems to be the State’s history of industrial unrest. Since Apollo Tyres in the late 1970s, has another private sector project of that magnitude come up in Kerala?

The successful implementation of the Apollo Tyres project was made possible, apart from other factors, because of the total cooperation by the State Government led by C Achutha Menon and the people of the State. In the equity base of Rs7.5 crores, the State Government invested Rs.50 lacs and individuals Rs.50 lacs more, under the Promoters’ Quota.

The approximately 100 acres of land identified for the project at Perambra, Trichur District belonged to forty-two people. A Special Thahasildar was appointed for land acquisition. The owners were magnanimous in giving us advance possession of their properties. Construction started even before the land acquisition process was completed.

In an era when ‘Single Window Clearance’ was unheard of, TV Thomas, the then Industries Minister convened a meeting of all Department heads, with the full support of the Cabinet. He instructed that Apollo Tyres files should be given top priority. Not a single hitch came up during the project implementation.

There was a time like that in Kerala – just three decades back, when so much money was not floating around.

What about today?

Ends.

Also see:

Quo Vadis, Kerala?

Quo Vadis, Kerala?

My post Onward, Kerala on June 3 was about the book Kerala’s Economy: Crouching Tiger, Sacred Cows, which was a compilation of the papers presented by eminent friends of the State at conference at Trivandrum in 2005. Since that meeting, not much water has flowed down the Nila (Kerala’s historic river Bharathapuzha) because it is a dying river now. But many changes have taken place in Kerala during that period.

On the heels of the State Chief Minister’s attack on the judiciary (In the news today) came the media coverage of a woman leader of the CPI slapping a lady police constable in public at the Capital, Trivandrum, during a demonstration. This happened on the 20^th. She was arrested and taken to the Police Station. Policemen are very clannish when it comes to assaulting a member of the Force.

But this script is different. The State Secretary of the CPI arrived at the Station. Two ministers and a member of the legislature followed him. They pressurized the Sub Inspector and made him release the culprit. Two days later the Chief Minister says he does not know the details! But he tries to justify the action of the politicians! One can imagine what effect this has on the morale of the Police Force.

It appears that no case has been registered against the offender. The Indian Lawyers Congress has appealed to the Governor to remove the two ministers involved. A private petition has been filed in the court. The Nationalist Lawyers Congress has sent a notice to the Director General of Police.

Another interesting news today is that the former Communist leader KR Gowri has sold her paddy fields. She was one of the moving forces behind the land limitation legislation that fragmented large holdings. You know, ‘land to the tillers’ economics. In reality it resulted in drastic drop in rice production in the State. Now a new bill on land is on the anvil and may cause further damage to the economy. It is something like trying to correct one mistake with another mistake.

Gowri’s reported reason for the sale: non-availability and prohibitive cost of labor. Un-ploughed lies my land !

Ends.

Also see: Savage Kerala

Kerala: More on coconuts

Jacob Matthan (Jacob's Blog) of Oulu, Finland, has left the following comment on my post ‘Kerala: Of monkeys and nuts’:

“This is quite disturbing. In all our supermarkets the number of coconut related products is increasing exponentially. The number of brands of coconut milk hitting the shelf are growing by the day. And each supermarket is bringing in its own brand. Coconut sweets are also becoming very popular. The products are coming from primarily Thailand which has learnt to exploit the western tastes at good profit. I hope Indian growers in Kerala can get together like the grape growers in Maharashtra as we are really seeing a trend here which must be allowed to become an accepted trend. Then the marginal cost of a coconut plucker should fade into oblivion!”

In 1985 I traveled to Stockholm, Sweden, to visit a research company named Scarab, which was doing a great deal of study into coconut products and processing. The CEO (forget his name) of that company was kind enough to pick me up from the airport. He told me to choose at random any one of the several supermarkets we would be passing en route to my hotel.

I was amazed to find an array of coconut-based products on display at the shop
that we went into. There was not a single one from India. The CEO told me that value adding to the coconuts was the way to the survival of the coconut sector in Kerala. He also explained that from their research they had found coconut oil was the ideal base for high quality suntan lotion and that income from coconut trees could be increased by twenty times.

On return to Kerala I tried to organize a project on the lines the Scarab chief had suggested. Unfortunately I couldn’t generate enough enthusiasm. While discussing the coconut situation yesterday at Olavipe, my brother Jacob came out with an answer. Today money comes to Kerala through mail from expats. Those back home still lead a laid back life. Why bother about coconuts?

Last Saturday at my club, a friend who deals in tiles mentioned that he is now importing coconut wood tiles from Philippines! They come in three grades – 30 years old wood, 50 years old, and 70 years old. And they are popular in Kerala, the land of coconuts!

Ends.

Also see: Kerala photos: Coconut palms