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Govt considering steps to contain gold imports: Chidambaram

Govt considering steps to contain gold imports: Chidambaram

The Union Finance Minister said demand for gold must be moderated and to do that importing gold will have to be made more expensive.

New Delhi: Concerned over rising gold import and widening current account deficit (CAD), Finance Minister P Chidambaram on Wednesday said the government is considering steps to make import of the precious metal more expensive. "Demand for gold must be moderated...We may be left with no choice but to make it a little more expensive to import gold. The matter is under government consideration," he said.

The CAD, which represents the difference between exports and imports after considering cash remittances and payment, has widened to $38.7 billion or 4.6 per cent of the GDP during the first half of the current fiscal, he said. This was mainly contributed by gold imports which amounted to $20.25 billion.

Had the gold imports been half of the actual level, Chidambaram said, "Our foreign exchange reserves would have increased by $10.5 billion" as against the marginal accretion of $0.4 billion during April-September. The country, the minister said, "Cannot afford to spend so much on importing gold. Nobody says gold within the country should not be used for whatever purpose. There is enough gold within the country. But import of gold is huge strain on the

current account".

During 2011-12, gold imports stood at $56.2 billion. On reports of smuggling of gold, Chidambaram said, it is mostly speculative. "May be some smuggling has taken place but whatever level of duty, there is always smuggling." In order to curb demand of gold, the then finance minister Pranab Mukherjee in his Budget in 2012 had doubled the basic customs duty on standard gold bars to four per cent and on non-standard gold to 10 per cent.

first published:January 02, 2013, 13:28 IST