A little tweak in the accounting method for India’s gold and gold jewellery that is currently “unproductive” for the economy could project India’s fiscal health in much better light.
Keeping this in mind, tthe government is looking to bring it under the category of either savings or consumption, while using it as a tool to hedge inflation.
At present, the valuables are placed under a separate heading within Gross Capital Formation (GCF), which is a proxy for investment thereby reducing both the savings and the private final consumption expenditure. However if it is treated as consumption item, it could push the country’s GDP while in case of savings, it would help the government in easing its fiscal deficit pressure.
Reserve Bank of India about two years ago had pointed out the need to look into the issue.
“We need to look into the issue and see how this could be brought into productive use and accounting which would help GDP,” an official source who did not wish to be identified told HT.
“The need of the hour is to chalk out a comprehensive gold policy and have a separate gold regulator to look into all aspects of the sphere,” Soumya Kanti Ghosh, chief economic adviser, State Bank of India said.
Meanwhile industry body Assocham has also written to Prime Minister Manmohan Singh to look into the issue. Rana Kapoor, president of the chamber and founding managing director and CEO of Yes Bank in a letter to Singh underlined the need to set up a gold bank in the country.
India’s gold imports in 2012-13 stood at 845 tonnes, the main reason behind a high current account deficit (the difference between dollar inflows and outflows).