A slump in Gold prices have renewed India's love affair with the yellow metal with imports of Gold, the country's second most imported commodity, jumping by over 60 per cent last month, threatening to widen the country's current account deficit (CAD), clouding the outlook for Asia's third biggest economy.
Gold imports climbed by 62.2 per cent to USD 2.96 billion in July 2015, government data showed last week.
In July 2014, inbound gold shipments stood at USD 1.82 billion. Meanwhile, India imported gold worth USD 1.96 billion in June 2015, a decline of 37 per cent from the same month a year ago.
Gold prices plummeted 7 per cent in the international market in July, making the precious metal cheaper to import, increasing its lure to Indians.
The jump in Gold imports in July pushed the country's trade shortfall to the highest level in eight months at USD 12.81 billion.
The mammoth rise in gold imports last month may have an adverse impact on the current account shortfall which narrowed to USD 27.5 billion or 1.3 per cent of India's GDP in FY 2014-15 from USD 32.4 billion or 1.7 per cent of the country's GDP in FY 2013-14.
India is the largest importer of Gold in the world. The country's gold imports mainly cater to the needs of the jewellery industry.