A rightist take on jeweller Strike in India

Yesterday I read in the news that blogger strike has entered 21st day. The jewellers went to strike on 16-Mar-2012 to protest against the increased in 2% import duty of Gold (2 to 4 percent) and introduction of 1% excise duty on Gold jewellery. It will amount to around 3 % increase in the final items then why such huge uproar? What does Indian government want to achieve?

India imports were more than 700 tonnes of Gold each year. The immediate impact would be to hike the price of jewellery in India to as much as three to four percent. It may not seem much but it will result in eliminating

• Competitive advantage of unbranded jewellers
• Demand to an extant as the a large portion of buyer thinks it as an investment. Now as the resale value drops the profit on this will recede.

Many of the analyst are predicting 33% decrease in gold demand. This will decrease current account deficit by 12.5 billion dollar and increase revenue by 100 million dollars. This is a bird eye view but devils are in detail. From the point of industry it will wipe at least 33% of industry and will further result in the larger portion of the artisans becoming unemployed. It may also result in the negative effect on the revenue generated by income tax.This hike may have the potential to wipe the unbranded jewellery industry in India, but why would government want this to happen (on the premise my observation are correct). The possible reason to this may be

1. GOI actions are idiot as usual and they never foresee this happening thinking too much of easy option to decrease deficit
2. GOI actions are greedy as usual (under the influence of lobby(read bribery) of branded jewellery outlets) or leading to an action of extorting bribe from unbranded jewellers.
3. Combination of the above two points i.e they are greedy and and also want to reduce deficit and let an industry be doomed so what.