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RBI for removal of restrictions on gold import

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RBI for removal of restrictions on gold import
Mumbai: Advocating removal of restriction on gold import as it encourages smuggling, Reserve Bank on Wednesday said efforts should be made to maintain the present level of Current Account Deficit (CAD) without any significant curbs on inward shipments.
 

"I would be much happier if we had the kind of CAD we have without significant curbs on anything, including gold. We should aim to have a CAD without any distortions, removing the incentives for smuggling, that is what we will be working for," he told a press conference here.

CAD, which is the difference between the inflow and outflow of foreign currency, had touched a record high of USD 88.2 billion or 4.8 percent of GDP last fiscal.

The government hiked import duty on gold to 10 percent and the RBI also imposed curbs on its imports by linking it with exports.

With this, the CAD was brought down to 1.2 percent in the July-September quarter, from 4.9 percent in Q1.

In the first half, the CAD stood at USD 26.9 billion (3.1 percent of GDP), down from USD 37.9 billion (4.5 percent of GDP) in H1 of 2012-13.

"At this point, I feel very comfortable with where we are on CAD," Rajan said. The government and the RBI expect to contain CAD at USD 56 billion. On an earlier occasion, the Governor had expressed concern that there was spurt in gold smuggling and was being paid for through the hawala channel.

Government expects gold imports to drop to 500 tonnes in the current fiscal as against 845 tonnes last year on account of measures taken by it along with the RBI.

PTI

Read more about: gold import rbi smuggling cad gdp
Story first published: Wednesday, December 18, 2013, 14:36 [IST]
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