This content was first published on IGR – Italian Gemological Review no. 1 in 2017. The information provided here is therefore current as of the original publication date.
Background: in November 2016, with a surprise move, India’s Prime Minister decided to withdraw 500 and 1,000 rupee notes (86% of all banknotes circulating in India), officially to combat counterfeiting, corruption and tax evasion. The withdrawal of these banknotes (worth about EUR 7,00 and 13,00) affected the Indian economy, sparking numerous demonstrations and protests against the government move, which sets a number of cash transaction limits.
But let’s remember that India is also the country where over 90% of the world’s leading diamond cutting and polishing companies are based. Jaipur’s gem industry, in particular, is based on a strong network of small and very small businesses that only know cash payments. Buyers’ liquidity problems made Gemfields sales fall by several percentage points, causing the company to put off some major auctions. At the end of the year, the jewellery industry also dropped by 80%. After a few months of panic, the industry has been recovering since January. Apparently, the transition from cash to virtual currency will inevitably be implemented and the recovery of the economy, after the shock in late 2016, could continue in the coming months. Long-term effects remain to be seen.
Gem News by Trasparenze News, published on Rivista Italiana di Gemmologia #1, May 2017.
