Falling gold purchases reduce India's import bill

17 Oct 2013 Last updated at 08:15:15 GMT
 
NEW DELHI (Scrap Monster) :  The Planning Commission of India has projected the country’s current account deficit (CAD) for the entire fiscal year to be around $40- $45 billion. This is sharply lower than the ‘red line’ target of $70 billion projected by the country’s Finance Ministry, thanks to the drastic fall in gold imports and the encouraging growth in exports.

According to Saumitra Chaudhuri, Member of the Planning Commission, the gold import bill for 2013-14 is expected to fall significantly to $35-38 billion as against $56 billion in 2012-13. This will be possible due to sharp hike in duty by the Government and tight gold import restrictions by the RBI.

India’s gold imports during Q1 2013-14 were 345 tonnes. The second quarter gold imports are expected to fall below 65 tonnes. The country’s gold imports for the quarter ended September fell by over 77 per cent in value and 28 per cent in volume, according to Finance Ministry data. The overall import bill for the July-September quarter on account of gold will be $2.7 billion as against $11.9 billion in the same period last year.

The gold imports may rise marginally during the festive season. But this could easily be financed so that the impact on the overall deficit could be minimized. The country’s gold import for the entire 2013-14 is likely to come down to 800-850 tonnes from 950 tonnes in 2012-13.

The Panel’s projections are based on the steep fall in gold imports and the significant boost in exports especially from the gems and jewellery and engineering sectors.

Author: Paul Ploumis