New Delhi: The Reserve Bank said it is in discussions with the government to curb gold imports which have seen a sharp surge in the recent months putting pressure on the Current Account Deficit.
Gold import surged almost four times to USD 4.17 billion in October from USD 1.09 billion same month a year ago. "With the surge in gold import which has been witnessed, it warranted a relook. Discussions are still going on between the Reserve Bank of India and the Government of India. Once we know what the discussions are, further view will be taken," RBI Deputy Governor S S Mundra said here.
Worried over surge in gold imports, the government last week held a meeting to discuss ways to curb the rising inward shipment of the precious metal. Gold imports have touched 150 tonnes in October, as against 24 tonnes a year ago.
The Reserve Bank of India in August last year had imposed severe restrictions on gold imports and raised import duty to 10 per cent in order to check burgeoning current account deficit and sliding rupee.
The steps by the central government helped lower gold imports substantially but also increased instances of smuggling. In May, the previous UPA government, eased certain rules and allowed private agencies to import gold under 80:20 scheme. This facility was available to select banks only and other entities were barred from importing the metal. Under the 80:20 scheme, an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.
The CAD, which had touched a record high of USD 88.2 billion or 4.8 per cent of GDP in 2012-13 is estimated to have come down to below USD 32.4 billion or 1.7 per cent of GDP in 2013-14. In April-June quarter of the current fiscal, the CAD narrowed sharply to 1.7 per cent, from 4.8 per cent of the GDP a year ago.
