Dematerialise gold : RBI's Subir Gokarn
Reserve Bank Deputy Governor Subir Gokarn today said there is a need to "dematerialise" gold like any other financial product to reduce its physical imports, the rise of which has been blamed for the high current account deficit that is feared to touch new record high this year.
"It (high gold imports) is creating some macroeconomic stresses and so the challenge is to find ways to replicate the financial characteristics of gold without necessarily causing physically importing," Gokarn told the last day of the two-day annual Bancon here.
The current account deficit or CAD has been rising on the back of record trade deficits, which in October jumped to a 12-year high of USD 21 billion on the back of rising oil and gold imports.
Reeling out the high gold import data, Gokarn said a working group headed by KUB Rao of RBI will shortly be coming out with its report on the ways to deal with the problem arising from high gold imports on macroeconomic front in the form of balance of payments.
He said while global gold output has stayed stable at around 4,000 tonne per year, the domestic consumption of the yellow metal has doubled to 1,000 tonne annually since 1999, despite a massive rally in the prices.
"More expensive gold is being imported in larger quantities which is compounding the troubles," he said.
As gold imports touched a record high last year, pushing up the current account deficit to a historic high of 4.2 percent in the year, the Reserve Bank has
