Gold Tax

By Ramesh Akkineni

We Indians are imposing a special tax on ourselves. It is the 'gold tax'. Our society has a traditional preference for gold that even the 'rational' person is 'forced' by his family to buy some gold. Gold in its natural form can perform the function as a currency or as a material for ornaments. It does not produce any thing after it has been mined from the earth. In effect we Indians are giving a 'gold subsidy' to all those countries which have gold reserves. We are giving our valuable time and capital for buying gold which does not help in the progress of the nation. It represents 'dead capital' or 'lost capital'. It is as if we all are carrying a heavy stone on our back. If we leave our traditions which force on us this absurd and heavy tax, we can prosper faster. We can spend the time and capital involved in mining of gold to fruitful purposes like food, shelter, comfort and find better ways of doing things in our society.

The history of India at all times has provided an example of a country impoverished by a preference for liquidity amounting to so strong a passion that even an enormous and chronic influx of the precious metals has been insufficient to bring down the rate of interest to a level which was compatible with the growth of real wealth. - Keynes in 'General Theory of Employment, Interest and Money'.

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