The hubbub that the Government may consider imposing limit on the domestic gold holding has been rooted out. In a major relief to many, a top finance ministry source said that the government is not considering any such proposal. Prime Minister Narendra Modi had announced on November 8 to demonetise Rs 500 and Rs 1000 currency notes to combat black money and corruption from the economy. Following it, there were anticipation that the next step might be imposing some kind of restrictions on gold holding by individuals, as reportedly many people had converted their black money into gold after the move.
However, the source said, “there is no such proposal before the government on restricting domestic gold holding.”
India is the world’s second-biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts. The move to withdraw higher denomination notes has already started to disrupt cash-based gold smuggling, officials had said. Scrap gold supplies were also set to halve this quarter as the cash crunch and falling prices make it difficult for consumers to liquidate their holdings.