India is looking at “some other” steps to curb gold import which has led to widening of the Current Account Deficit (CAD), Finance Minister P Chidambaram has said.
“We are looking at some other steps to moderate the import of gold,” he said in an interview to Financial Times.
To check imports, the government last week hiked duty on gold to 6 per cent from 4 per cent. It also linked gold ETF (Exchange Traded Fund) schemes offered by mutual funds to gold deposit schemes of banks with a view to increase availability of physical gold in the market.
“We have thrown some sand in the wheels by raising the taxes,” the Minister said, adding that linking the two schemes “will unfreeze 15, 20 tonnes of gold, idle gold, and bring it into the market. So if that idle gold comes into the market, it will moderate imports.”
Till December India has imported gold worth USD 38 billion. In the last fiscal, the gold import was at USD 56 billion.
Gold import, which was only second to oil, contributed to the CAD, which widened to a record high of 5.4 per cent of GDP in the July—Sept quarter.
Even the Reserve Bank in its policy review has raised concerns over the high gold import and CAD, which is the difference between inflow and outflow of foreign currency.
Keywords: gold imports, bullion, Current Account Deficit, gold bonds, gold ETF
PC : you are like all politicians everywhere including overseas who think they can control how people act by tweaking policies.Unfortunately,they don't.USD and JPY interest rates are at record low, even below even lower record low inflation because of QE 1,QE 2 and now QE 3.Has it led to more lending ? No.Why ? Demand for gold is inelastic in India because of its traditional link with festivals.May be you think you can abolish festivals ! So your eforts will only irritate common people and will teach Congress Party a good lesson in 2014.Instead why don't you free trade in rice and wheat and allow their export earnings to offset what India pays for gold.Give up your outmoded thinking you can control people by your draconian taxes.Your taxes are a free gift to smugglers.Why don't you ask Singapore,Dubai & HK not to exempt gold exporting from GST or usual trade destinationreporting statistics released every month.With your measures,courier trade,smuggling,corruption will thrive.
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