Govt may further ease restrictions on gold import soon: P. Chidmabaram

Written by PTI | New Delhi | Updated: Apr 1 2014, 01:24am hrs
PFinance Minister Palaniappan Chidambaram speaks during a news conference. India will consider easing curbs on gold imports in consultation with the central bank, Chidambaram told a news conference on Monday.(Reuters)
Finance Minister P Chidmabaram today indicated that government may further ease restrictions on gold imports after tomorrow's monetary policy by RBI as Current Account Deficit has moderated to about USD 35 billion.

"Some relaxations were made a few days ago when more banks were allowed to import gold. We could consider some more relaxations in consultation with RBI," he said while releasing the year-end report on economy.

"Let the RBI's monetary policy be announced tomorrow and then we will consider whether some relaxation can be done," he said.

Also Read: Current account deficit in India likely to be $35 bn, says FM P. Chidambaram

Emphasising that the economy today is far more stable and far stronger than what it was 20 months ago, he said, CAD is expected to come down about USD 35 billion during the current fiscal.

It was at a record high of USD 88.2 billion or 4.8 per cent of GDP as gold imports soared 845 tonnes last fiscal.

In order to restrict CAD, the government took measures to curb gold import. The government raised import duty on the precious metal three times taking it to 10 per cent and also made it mandatory to export 20 per cent of the total gold imported.

Following this gold imports came down to 19 tonnes in November from a peak of 162 tonnes in May. The CAD, too, was brought down to 3.1 per cent in April-September of current fiscal, from 4.5 per cent in the same period last year.

Gold imports have fallen substantially after the restrictions. Gold and silver imports declined 71.4 per cent to USD 1.63 billion in February.

Imports of gold and silver in February 2013 stood at USD 5.24 billion. In January this year, they were USD 1.72 billion.

Earlier this month, the RBI allowed more banks, including Axis Bank and Kotak Mahindra Bank to import gold under the 80:20 scheme.

Under the 80:20 scheme introduced on August 14, nominated agencies could import gold on condition that 20 per cent of the shipment would be exported and the remainder kept for domestic use. Permission for subsequent imports would be given on fulfilment of the export obligation.

So far, only six banks and three financial institutions were allowed to import gold under the 80:20 scheme. On a consignment basis, 21 banks, as permitted by the RBI, can import gold and silver.

Gold graphs March 31, 2014

Indian rupee March 31, 2014