Expressing concern over widening trade deficit, the Reserve Bank and the ministries concerned are devising steps to contain gold imports, Commerce Secretary S.R. Rao on Tuesday said.
“Trade deficit is of concern to the government. But this is a step in which RBI, Finance Ministry and Commerce Ministry are involved. So, we are consulting. At the moment this is all I can say,” Mr. Rao said on the sidelines of an Assocham function in New Delhi.
He said the RBI has already put some restrictions on consignment imports of the banks. “So, we are seeing which way we need to move forward now. We are examining...,” he added.
In May this year, India’s gold imports have touched 162 tonnes. Gold imports in the country, the world’s largest consumer of the metal, stood at around 830 tonne in 2012-13.
The surge in gold imports pushed up the trade deficit to $17.7 billion in April this year.
On Monday, the government said there will be corrective measures to check the alarming trend that has put huge pressure on current account deficit (CAD).
The Financial Stability Development Council (FSDC), chaired by Finance Minister P. Chidambaram, met on Monday and also discussed the concerns on gold imports.
“The Council noted with concern the significant increase in gold imports in recent months and deliberated on the issues involved in this regard,” the Finance Ministry had said in a statement after the meeting.
Department of Economic Affairs Secretary Arvind Mayaram also had hinted that the government could take more steps to reduce gold imports, which may include banning sale of the precious metal by banks.
“More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banning gold coin sale by banks,” he had said.
The government and Reserve Bank have been taking steps to reduce gold import. High import has widened the current account deficit (CAD), which hit a record high of 6.7 per cent of GDP in October-December quarter of 2012-13.
Last month, the RBI had imposed curbs on import of the precious metal by banks. Besides, it has also put restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs.
The government has also taken steps like hike in import duty to restrict gold imports.