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Indians go for gold despite government hiking import taxes

An Indian employee at a jewellery stall picks up a piece of gold jewellery in Bangalore on October 14, 2011.

Indians love weddings, and Indian weddings need a lot of bling. In fact the giving of gold jewellery is a big part of the event. To get an idea of just how big a deal it is, I went to a wedding in Calcutta. I was trying to find out how people could get so much gold together.

Guest Sourbee Kampani thinks preparation is everything.

"For my daughter we have started from the minute she was born. I think it is very important. At weddings we have to give some amount of gold. Gold is a must," says Kampani.

Her fellow wedding guest Shubra Agarwal agrees.

"Gold is a woman's best friend," Agarwal says, "and it belongs to that woman and nobody can take it from her".

Bride-to-be Tania Sadhu also didn't see anything wrong with India's golden obsession.

"You cannot think of a wedding without some kind of yellow bling around. Gold is a status symbol," Sadhu says.

However, the government doesn't share Sadhu's enthusiasm. India is the world's largest importer of gold. Every year the country brings in more than 900 million tonnes. The government is worried that people are spending too much money on the imported precious metal. Huge amounts of cash are flowing out of the country. So in response, they've raised the import taxes on gold. But will it work?

Watching the Calcutta wedding with me was business analyst Mudar Patherya. He wasn't exactly hopeful. 

"Do you actually believe here in India people will give each other equity shares when they get married. What will you hang round your necks. A certificate?" Patherya asks.

But weddings are just getting bigger and bigger, and so people are buying more and more gold. The Indian government may have to raise taxes again, but it appears that it will make little difference to people here.

In the world's largest democracy, the only thing that glitters is gold.

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