'India's gold gluttons would keep gorging through duty hike'
India's passion for gold is putting such a strain on state finances that the government may slap higher import taxes on the precious metal, but demand buoyed by heady inflation and meager savings will blunt the impact of any rise in duties.
Initial success from a tax hike in March last year was stifled by the arrival of major festivals such as Diwali, when gold is a must-give present, and the winter wedding season.
That has scuppered New Delhi's goal of reining in spending on gold by around a third to $38 billion in the fiscal year that ends in March, prompting Finance Minister P. Chidambaram to say another tax increase could be on the cards.
But market participants say that would do little to dull gold's lustre for most Indians, especially with bullion prices heading north.
And the finance ministry would ideally like imports to be around $30 billion, an economic adviser there has told Reuters, with industry experts dismissing this as little more than wishful thinking.
India is challenged only by China in its appetite for gold, and with nearly all demand covered by imports, the country's purchases are a major factor in global prices.
The latest figures show the volume of imports jumped 48 percent in July-September from the quarter before and were only 8 percent down on 2011.
"It is the disease that needs to be cured rather than the symptom," said Munish Dayal, a partner at Baring Private Equity Partners India Limited.
With inflation above 7 percent and India's central bank keeping key
