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Updated: December 30, 2013 16:36 IST

Gold imports curbs should continue: Chidambaram

PTI
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Finance Minister P. Chidambaram
The Hindu Finance Minister P. Chidambaram

We should also attempt to discover more gold in our own country, the Minister says

Notwithstanding the likelihood of the current account deficit (CAD) narrowing to less than $50 billion, Finance Minister P Chidambaram on Monday made a case for continuing some kind of restriction on gold imports.

“I think there should be some restraint on gold imports.

We should also attempt to discover more gold in our own country,” he said in an interview to CNBC-TV18.

Referring to a recent Supreme Court judgement on auction of all closed mines, he said the Mines Ministry should sell “the so-called closed mines because there are persons around the world who have met me and said, ‘Give us the mines and we would be able to extract gold.’”

He said, “As a proposition, restraining gold imports is a correct move.”

However, some experts, including RBI Governor Raghuram Rajan, have favoured doing away with curbs on gold imports because they lead to smuggling.

Indian love for gold is a global subject to be investigated. It is assumed to be a safe bet during unstable financial world, as hedge against money value fluctuation on different currencies. At present scenario, Indians are be fooled by corporates who work with ETF from & within a global platform. Indian hold around 1 trillion $ worth gold in custody. If they sell 10% of their holding in open market, global gold price must have plummeted to less than 50% of its peak value by now. It must have stopped. that is a global requirement. otherwise many of the corporate houses might have wiped out. Who will help to tide this situation and how? However it is prevented systematically and saved the gold fall out dramatically by responsible Indians.
World gold price tumbled 30% last year alone. If it was translated in rupees, today’s price should be below rupees 2000 per gram, but managed well above that. First of all we allowed free fall of Indian currency around 12%. Effectively gold price jacked up equivalent ! global demand was sliding thus price of gold so we placed import restriction, imposing 10-15% tax ! Indian price is maintained jacked up ! then corporate imposed additional margin, to bring in gold for public there is difficulties which Indians should bear. Thus world enjoyed 30% less gold price but for Indians only 2.5-3% less.
Who benefitted is global gold lobby. If the proper gold price fall might have reflected in India market, with proper currency value support, ETF withdrawal must have triggered cascaded price fall, reversing the concept of holding gold as a safe deposit heaven, subsequent sell off. That might have resulted the reversal of Indian CAD management is safe limit, transferring the benefit of price fall in gold, directly to genuine consumers. but now it is restricted to corporates and international smugglers only. You know who is driving this drama better than me.

from:  varghese.al
Posted on: Dec 31, 2013 at 13:20 IST

Good decision. Also measures should be taken to bring the price of yellow metal under control

from:  Mahesh
Posted on: Dec 30, 2013 at 23:34 IST

I agree with Mr. Pa. Si on this issue. Indians need to rethink on their sentimental attachment to gold on a large scale.

from:  Arun Ramamurthy
Posted on: Dec 30, 2013 at 17:38 IST

Shobhan Sarkar may be appointed as Cabinet Minister for exploration of
Gold.

from:  Gyanendra
Posted on: Dec 30, 2013 at 17:21 IST

I fully agree with the FM and disagree with Governor. Gold is not useful for anyone. A smuggler has to take enormous risk and hence it is worthwhile banning import.

from:  P. Vasanth Kumar
Posted on: Dec 30, 2013 at 17:12 IST
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