Desperate to axe India's gold habit, govt mulls yellow metal-linked schemes to curb import
In its Mid-Year Economic Analysis tabled in Parliament today, government said gold-backed products will help the investor enjoy benefits of investment in the metal without investing in the physical commodity.
"Now gold backed financial instruments in the form of modified gold deposits and gold accumulation plans, besides gold-linked accounts and pension products linked with the precious metal are some measures being considered to reduce the attraction of a direct investment in bullion and jewellery in the domestic market and check a substantial rise in imports," the review said.
However, gold-linked investments would have to be monitored to see whether the overall demand for the metal actually falls, it added.
The Finance Ministry's Chief Economic Advisor Raghuram Rajan told reporters: "We are worried about gold imports. It is an unproductive instrument. The way to curb holding of gold is to create more attractive financial instruments.
"Some gold linked instruments have been talked about by the RBI but potentially there could be other financial instruments to attract investment."
The current account deficit (CAD), which occurs when a country's total imports are greater than total exports, 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.
"We are worried about CAD. We
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