Gold demand in India witnessed a significant decline of 21 per cent in 2016 at 675.5 tonne, mainly due to challenges like jewellers strike, PAN card requirement and demonetisation move, says World Gold Council.
The gold demand for 2015 stood at 857.2 tonne, the WGC data revealed.
Jewellery demand in the country also witnessed a sharp decline of 22.4 per cent in 2016, at 514 tonne compared to 662.3 tonnes in 2015.
In value terms, jewellery demand saw a drop of 12.3 per cent in 2016 at Rs.1,38,837.8 crore, from Rs.1,58,310.4 crore in 2015, the report revealed.
"India's gold demand for 2016 fell sharply, though the fourth quarter demand grew by 3 per cent to 244 tonne, due to softened gold prices that coincided with Diwali and wedding season. Demand was affected as the industry faced challenges, including PAN card requirement, Excise duty on jewellery, demonetisation and the publicity around income disclosure schemes," WGC Managing Director, India, Somasundaram PR said.
This was not unique to gold but trade practices and embedded buying behaviour created short-term headwinds, he said.
Looking ahead, these policies aim to deliver stronger economy and a more transparent gold industry, both of which should deliver significant benefits to gold buyers as well as accelerating transformation of the industry in becoming more organised, he said.
Also, the rural community was the hardest hit by cash crunch, but the effect is likely to be temporary as healthy income and good monsoon will support gold demand going forward, he explained.
Somasundaram said, "We anticipate that 2017 will see a demand range of 650-750 tonne due to the introduction of the Goods and Services Tax (GST) coupled with gradual adaptation to the previous year's policy changes."