The government is likely to take baby steps towards easing restrictions on gold import. According to finance ministry sources, there would be minor tweaking to allow easier imports of the yellow metal but any major step is unlikely due to the model code of conduct.
Finance minister P Chidambaram had earlier said that the issue would be looked into after March 31, depending on the full fiscal’s current account deficit — the difference between inflow and outflow of foreign currency — situation. CAD for 2013-14 is expected to be around $35 billion.
Banks, which were earlier asked to stop selling gold, have been allowed to import the precious metal.
“There is unlikely to be any major change and more importantly the next government will have to take a concerted holistic approach to address the issue of CAD,” a senior government official told HT on the condition of anonymity. The government and the Reserve Bank of India (RBI) would jointly look into the issue.
The government raised import duty on gold after CAD touched an all-time high of 4.8% of GDP in 2012-13 primarily on account of increase in oil and gold imports.
“There is need to look into the issue of CAD and we must ensure that exports are increased to balance the imports… it may take a few months before any major decision on gold import restrictions is taken,” said Ajay S Shriram, president, CII.
Assocham president Rana Kapoor added that the new government must not only address the issue of controlling CAD, but also look into chalking out a detailed policy on gold. “The government must come up with a full plan on CAD to ensure that it does not reach any alarming level while a gold policy is also critical,” said Kapoor.
The restrictions have also led to an increase in gold smuggling. Chidambaram had earlier indicated that about 1-3 tonnes of gold were being smuggled every month.