Here's some reading for you:
FT Alphaville - Rajan and the informal market. I disagree, btw, that the large informal economy can pay a demographic dividend. First you have to bring them out of abject poverty and into the 20th century.
Caravan Magazine - Rajan takes charge at the RBI. Month-old article, but probably very good for background. Check it out, I haven't looked at it yet.
Economist - India's informal economy. Valuable background. Though again, remember India has a structural problem in the continued existence of the caste system and a class conflict between bourgeois and proletariat - and hey, I'm sorry to resort to Marxist terminology, but frankly Marx would have had a frickin' field day in India. The country makes 19th-century London look like a bloody worker's paradise.
FT - gold is part of the fabric. Here's something interesting:
“If you are a mass-market consumer and live in a semi-urban or rural area and have some money to save, you can buy gold easily, close to where you live, and it is liquid and fairly safe,” says Mr Thomas. Loans against gold are easy to come by too – though in a nation where relinquishing family stocks carries stigma, this option tends to be used only in emergencies.Also,
Sharply rising rural incomes have spurred gold investment further, a factor that in some instances is complemented by the metal’s rising price. “If gold prices go up it doesn’t deter people from buying . . . it is only an indication that it is a good investment,” says Shinjini Kumar, a director at PwC India.And
Though in the south of India, there is higher per-capita gold ownership despite more banking penetration. So don't believe all you read, especially from ignorant upper-class Indians blinded by their own wealth.
And here's something I like:
As western investors lose patience with gold, however, the traditional sources of demand are once again catching the attention of traders and analysts. Since the government restrictions on imports began to take effect, the amount of gold being smuggled into India has become one of the key unknowns for the market. “It’s one of the main things we’re looking at,” says one hedge fund manager. “It’s fair to say that the physical markets are becoming more important again as the investment markets have contracted,” says Mr Steel. “India’s prominence is moving closer to centre stage again.”1. Been reading my blog, guys?
2. What, supply and demand means something with gold? It's not "money"? It's not a hedge against Treasury yields? Really?
3. If gold-trading Whiteys are now paying attention to Indian demand, I wonder what'll happen to the price of gold as Narendra Modi's election victory approaches? Get bid up like crazy, perhaps?