Government must roll back gold control measures.

On September 19, two women were caught smuggling 20kg of gold through Cochin International Airport, leading to the arrest of not only the brain behind the racket but a couple of senior customs officers who were facilitating the smooth passage for the contraband coming in from Dubai. There is no way the nabbed Fayaz was the sole operator in Kerala. Enjoying a free run in Chennai and Mumbai, not to mention the lesser cities with a history of gold trading like Rajkot and Jaipur, could be bigger shark.

The recent arrests of carriers in Calicut and Chennai international airports merit a closer look. If the former was worth 11kg over 20 days, the latter yielded 32kg of gold from a single seizure this Tuesday. The emergence of a thriving market for smuggled gold can be traced to two factors: the 2012-13 Union budget decision to impose customs duty on gold imports, with rate escalation from two per cent to 10 per cent in six months and a July 23 Reserve Bank of India diktat that 20 per cent of imported gold be earmarked for exports. Jewellers who could source gold at a measly rate of Rs 10,000 per kg till March now need pay over Rs 3 lakh per kg and then find an export avenue for one-fifth of the imported volume.

If the idea behind raising the import duty to such untenable levels was to net more revenue to the exchequer, then it has failed. The State Trading Corporation that imported 3,000kg of gold to service jewellers in Kerala in April-June could manage only 50kg in July-September. At the national level, big brother MMTC that imported 17 tonnes of gold during the first quarter of this fiscal was faced with the ignominy of being able to manage only 1.4 tonnes in the second quarter, its average annual import of 40 tonnes now a distant dream. Smuggled gold into India is likely to reach 200 tonnes in 2013, up 50 per cent from 2012. The government should consider a rollback of its ill-advised policy initiatives on gold imports unless it wishes to usher in yet another “golden” era for smuggling that flourished in the 1970s.

Source : newindianexpress.com