An industry body has urged caution within the Indian gold market, claiming that an increase in demand will lead to the country exporting as much as three times the amount of gold it currently does by the time 2015-16 rolls around.

This would lead to market to reach an unsustainable level of $100 billion unless those involved in the industry take action as soon as possible to increase productive capacity to ensure the burden isn’t felt.

“The foreign exchange resource that is used to import gold reduces the availability of this free exchange to finance the import of other commodities. The Reserve Bank of India (RBI) in its review of macroeconomic situation has said current account deficit is a cause of concern because of inelastic gold and oil demand. Efforts must be made to introduce more financial saving instruments and extensive education campaigns should be undertaken – particularly in rural areas – to minimise propensity towards gold,” said the study conducted by Assocham (The Associated Chambers of Commerce and Industry of India).

The study also claimed that gold offered little to the productive capacity of the Indian economy.