HindustanTimes Sat,20 Dec 2014

Too many curbs on gold import will push up smuggling: PMEAC

PTI  Mumbai, December 01, 2012
First Published: 18:45 IST(1/12/2012) | Last Updated: 18:51 IST(1/12/2012)

PMEAC chairman C Rangarajan said on Saturday that banning gold imports will push up its smuggling and also stated that there are already indications that illegal shipments of the precious metal have gone up in the last three months.


"If we ban gold imports, the smuggling will go up... there are already indications that smuggling of gold has gone up in the last three months," C Rangarajan, chairman of Prime Minister's Economic Advisory Council (PMEAC), said here.

He was addressing the silver jubilee celebrations of RBI-promoted Indira Gandhi Institute of Development Research.

"I believe gold imports will come down when inflation goes down," he added. Gold is considered as a hedge against price rise.

Rangarajan said he has been told by revenue department officials that the seizures of smuggled gold have gone up in the recent past.

In the same event, Reserve Bank governor D Subbarao reiterated his concerns over rising gold imports and citied its pressure on current account deficit.

He, however, said, "RBI has not put any new restriction on gold imports. Our announcement to stop lending for gold purchase was a reiteration of decades-old decision."

Rangarajan said last year gold imports touched $60 billion, of which $15-20 billion was due to high inflation as people use the precious metal as a hedge against inflation.

RBI deputy governor Subir Gokarn had recently called for dematerilisation of the metal to discourage its physical possession, hoping that this move will trim imports.

Traditionally, India has been the world's largest consumer and importer of gold. Last year, imports was to the tune of 969 tonnes.

However, doubling of the excise duty to 4% in the last budget and the curbs that RBI imposed on gold loan value (down from 85-90% of the value of jewellery to 60%) and banning banks from funding gold purchase by loan companies have led to drop in imports.

In April-October imports declined 35% Y-o-Y and overall imports is set to drop over 17% to 800 tonne this year.

more from Business

Year-end high: Flipkart announces $700 million funding

Flipkart, India’s largest e-commerce marketplace, on Saturday announced a US $700 million (Rs 4434 crore) investment even as 2014, the year that has seen huge fund flow into India’s rising consumer internet industry, is about to end.

Most Popular
Copyright © 2014 HT Media Limited. All Rights Reserved