| Date: |
19-11-2014 |
| Subject: |
Govt working on new gold import curbs |
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NEW DELHI: The government is contemplating some fresh curbs on gold imports to check a sudden surge in import of the yellow metal and prevent any shock to the current account deficit (CAD) or the wider economy.
"Things are being worked out by the finance ministry and some announcements may come in a day or two," said a source, when asked whether the government was planning to put some restrictions to curb the surge in gold imports. RBI and the government had held talks last weeks to devise the new restrictions.
The latest trade data showed import of the yellow metal spiralled nearly four times to $4.2 billion in October from $1.1 in the same month last year. Gold imports have shot up to 150 tonnes in October compared to 24 tonnes in the same year ago period.
The government has been keeping a close watch on gold imports in view of the impact on the CAD and the currency. RBI and the government had imposed stiff restrictions, including a 10% import duty on the yellow metal. The stringent restrictions were imposed after a sharp widening of the CAD and the impact on the rupee. The step taken by the central bank and the government helped steady the currency and trim the CAD.
Bowing to pressure from jewellers, the previous UPA government had eased some of the curbs and private agencies were allowed to import gold under the so called 80:20 scheme. The scheme stipulates that 20% of the imported gold is used for export purposes and 80% for domestic use. Officials in the finance ministry say the move to ease has also contributed to the surge in gold imports.
Stiff curbs have also led to an increase in smuggling of the yellow metal which rules out any fresh increase in import duty. This would add to the problem rather than tackle it, officials say. Therefore, the measures are expected to be well thought out and sequenced to ensure they do not lead to any distortions. In the April-June quarter of the current fiscal, the CAD narrowed to 1.7%, from 4.8% of GDP a year ago.
Source : timesofindia.indiatimes.com
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