Here’s more bad news for the global gem and jewellery industry. The two biggest and fastest-growing markets it is depending on to rescue it from the slump in the US market, seem to skidding off the rails themselves.

India, one of the world’s fastest-growing consumer markets, is coming off the boil. Loud newspaper headlines today made us aware of the fact that industrial growth had slipped down to 5.3%, setting off alarms. Indian finance minister P. Chidambaram had warned that a recession in the global economy and a strengthening rupee had adversely affected India’s growth outlook while high interest rates had slowed consumer spending this last year. India, the minister said, was at risk of missing its economic goals.

India is facing its own version of the subprime crisis in the US with a growing number of defaults in the small, unsecured loan sector. The country’s central bank, the Reserve Bank of India, is unable to help the consumer because it has to keep interest rates high to combat inflationary pressures. Small, unsecured loans were until recently the fastest-growing loan sector and the one banks couldn’t seem to jump into fast enough. Now there’s an unseemly scramble as the banks all want to get out.

So what does consumer seeking a small unsecured loan do? Turn to that venerable Indian institution, the neighbourhood jeweller/bullion dealer/pawnbroker all rolled in one, as this report indicates.

And just the other day it came out that China’s inflation was the highest it has ever been in 12 years. Driven by a 23.3% increase in food costs, this high inflation carries with it the danger of civil unrest according to this report.

Until just a few weeks ago, the biggest worry about jewellery consumption in India and China seemed to be the price of gold. Consumers in both countries seemed to keep wanting jewellery despite soaring gold prices, this report said at the end of February.

All of a sudden, the scenario is completely different.