Rs 2000 notes withdrawal impact: Jewellery sales witness surge, no panic buying
GJC acknowledges that there has been a slight increase in jewellery sales following the withdrawal of Rs 2000 notes by RBI
Anushruti Singh May 24, 2023
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Increase in jewellery sales: It’s a déjà vu for jewellery players in India, after the Reserve Bank of India’s (RBI) decision to withdraw the Rs 2,000 note. Déjà vu of 2016, however, the scenario is quite contrary to what jewellery sector witnessed during demonetisation.
According to the jewellery stakeholders, they are getting more inquiries to buy gold and silver soon post RBI’s big announcement to withdraw Rs 2000 tender. Meanwhile, the jewellers’ body All India Gem And Jewellery Domestic Council (GJC) acknowledges that while there has been a slight increase in jewellery sales following the withdrawal of Rs 2,000 notes. It is important to note that the impact is not as significant as during the 2016 demonetisation.
In 2016, there was widespread panic and rush among consumers to convert their high-value notes into tangible assets like gold, resulting in a surge in jewellery sales.
However, this time, the situation is distinct.
In Kolkata, for example, jewellers have witnessed an increase in payment by 15-20 per cent with Rs 2,000 notes, as compared to the weeks before May 19 when the central bank made the announcement, Bachharaj Bamalwa, partner of jewellery chain Nemichand Bamalwa & Sons, told PTI.
Rohan Sharma, MD, RK Jewellers commenting on the current situation says that the Rs 2,000 notes remain legal tender, which means there is no urgency or immediate need for consumers to convert them into jewellery or other assets. Additionally, the price of gold has risen significantly since 2016, making it less attractive as an investment option for middle-class Indians compared to when prices were lower.
At present, as of now (23 May) the current gold rate is 62,070 per 10gm.
“The overall market conditions have also evolved. Digital payment methods have gained popularity, and more people are opting for cashless transactions or using credit cards for jewelry purchases. This shift in consumer behaviour has impacted the fraction of people who use cash versus those who prefer digital payment methods,”
Considering these factors, the jewellers’ body suggests that the long-term impact of the Rs 2,000 note withdrawal on the jewellery sector remains uncertain. It will depend on various factors such as consumer preferences, economic conditions, and the continued adoption of digital payment methods, he added.