Column : Back to the golden past
India could be importing gold worth about $55 billion by the end of this fiscal, a 60% rise over the gold imported in 2010-11. In fact, such a massive surge in gold import is being seen as a problem by policymakers, especially in the current context of rising current account deficit putting pressure on the rupee. If gold imports had been normal, like what was seen in the earlier years, India would have saved over $25 billion of foreign exchange this year, thus virtually halving its current account deficit, which may touch 3% of GDP in 2011-12.
So, the policymakers’ dilemma is whether to discourage imports of gold, which is seen as a non-productive asset in the short run. It just sits in the vaults of households across the country. Indian households
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