Akshaya Tritiya, the third day of the lunar fortnight of 'Vaishakh’ - the second month according to Hindu calendar, is considered one of the foremost sacred days of the year.

The word Akshaya means, 'which never diminishes’ in Sanskrit. Hence it prompts people to buy valuables particularly gold and the day is believed to bring good luck and success. It is believed that if you do charity on this day you will be blessed. The legend is that any venture initiated on the auspicious day of Akshaya Tritiya continues to grow and bring prosperity.

The Reserve Bank of India (RBI) has today reduced its interest rates by 25 basis points to 7.25%, in line with expectations, with inflation and global commodity prices moving in a favourable direction.

In March, annual inflation based on the Wholesale Price Index (WPI) came in at 5.96%, the slowest rate in years, down from 6.84% a month earlier. Food prices were at the heart of the slowdown, remaining unchanged between February and March, while fuel and power prices rose 0.36% and the price of manufactured products 0.13%. Annual consumer price inflation figures show inflation slowing to 10.4% in March from 10.9% in February.

"The moderation in WPI inflation set the scene for the RBI, where remains a tension between the competing priorities of stimulating the economy, tackling inflation and considering India’s unsustainable current account deficit,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "The rate cut should act as turnaround catalysts for renewed economic activity”.

The World Bank revised its growth forecast for the Indian economy in 2013-2014 to 6.1%, lower than its 7% estimate six months ago. The drop came at the back of lower agricultural growth at 2% instead of the previous 2.7%, even though the country is expecting normal monsoon.

India’s growth has been slowing, and hit a nine-year low of 5.3% in the March quarter, partly because of a global slowdown as well as weaker demand and investment activity at home. India received foreign direct investment (FDI) worth $1.79 billion in February 2013, a decline of about 19% due to global economic slowdown. In February 2012, the country had received FDI worth $2.21 billion.

"There is a need to further improve the business environment. Reforms in the last one year are welcome, but more needs to be done in order to build foreign investors confidence,” said Rangar. "Decline in foreign investments could put pressure on the country’s balance of payments and may also impact the value of the rupee.”

India's trade deficit eased to $10.32 billion in March from $13.54 billion recorded a year ago, much below the analysts’ expectation of a $13.50 billion deficit, as exports rose for the third straight month. Exports rose by 6.97% annually to $30.84 billion in March, while imports for the month declined 2.87% to $41.16 billion aided by a sharp fall in fuel prices.

In its March statement on the balance of payments for the third quarter on fiscal 2013, the RBI said the rise in the import bill was spurred largely by oil and gold imports. Gold has lost some of its sheen among global investors, with the price of the yellow metal down almost $224 per ounce since the beginning of 2013.

In its previous monetary policy review, on March 19, RBI had reduced the repo rate by 25 bps to 7.50% and kept CRR unchanged. It’s still well above the 6% set two years ago in Sept. 2010.

IndusView, Wednesday April 24 (London): Gold demand in India, the world's largest consumer, surged last week as a collapse in its price coincided with one of the most auspicious days for the country's majority Hindus to buy the yellow metal.

India, the world's top buyer of gold, is believed to account for close to 20% of global demand. The country imported 864 tonnes last year - even though gold prices were at a near unprecedented level. Gold imports are likely to increase 20% to about 183.6 tons in April-June quarter.

An 11% slump in gold prices since last week released years of pent-up demand, resulting in a supply shortage in the physical market and triggering higher premiums. The price of gold in Mumbai has dropped by nearly $100 per 10 grams in just one week.

"The falling prices have come in as a boon and Indian consumers are making the most of it ahead of Akshaya Tritiya festival, which is on May 13th this year,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "It is a tradition to buy gold in India where it is synonymous with social status and prestige.”

The term "Akshaya" means "infinite", or "never diminishing", and gold bought and worn on the day of Akshaya Tritiya is said to bring "never diminishing" good fortune. As such, retailers step up their marketing campaigns around the day. Shree Ganesh, for example, is one of several outlets hoping to entice customers through their doors by offering free gold coins with purchases over set amounts.

As the price of gold fell from its 2011 peak at more than $1,800 an ounce to about $1,400 an ounce in the past week, jewellery retailers in India started to report a surge in sales - and expect volumes to continue to rise in the coming months.

India's gold imports are likely to go up by 20% to about 183.6 tonnes in April-June quarter due to rise in demand triggered by weak prices.

India has always been almost completely dependent on imports, which is why India's government increased import duty on gold from 4% to 6% in January this year.

"If commodity prices are sustained at today's lower levels, the current account deficit may improve,” said Rangar. "This will in turn help the Reserve Bank ease its policy rates for its next month’s policy review.”

Finance Minister P. Chidambaram recently said he expected the country’s current account deficit for the 2012-2013 fiscal year ended March to be about 5% of GDP and perhaps half that amount in one to two years.