Author: Paul Ploumis13 Oct 2014 Last updated at 08:21:10 GMT
NEW DELHI (Scrap Monster): India’s former Finance Minister, P Chidambaram has advised not to lift gold import curbs earlier imposed by his government. According to him, the benefits from these restrictions are sure to outweigh the menace caused by gold smuggling. He added that the time is not ripe now to lift the sanctions imposed on gold imports, as it may result in economic imbalance.
According to Mr Chidambaram, the country should concentrate more on pushing exports in the long term. A sudden rise in exports is unlikely to happen. Hence the country must persist with controls on imports. Gold and crude oil are the goods that contribute to the high import bill. Continuing with gold import restrictions is the only option left to contain rising CAD, he added.
Mr Chidambaram, during the previous government’s regime had hiked the import duty on gold three times during 2013 to as high as 10%, following the CAD touching an all-time high of USD 88.2 billion in 2012-’13. In addition, the Reserve Bank of India had imposed the 80:20 rule which stipulates gold importers to export at least one-fifth of imported gold. Admitting that gold smuggling acts have gone rampant post imposition of gold curbs, Mr Chidambaram however claimed that the benefits are too big.
There were widespread hopes that the new government may do away with the curbs. On the contrary, it has decided to continue with the curbs. The Finance Ministry officials have clarified that removal og gold import curbs is not in the agenda of the government as of now.