The government will ?carefully weigh? the pros and cons of relaxing restrictions on gold imports, but will give importance to the goal of containing the current account deficit (CAD) at a level where it can be fully and safely financed, finance minister P Chidambaram said.
?The operative word is, we will look into it (relaxing gold import curbs),? he told reporters. However, he added that no announcements can be made on the issue as Parliament is in session.
Gold imports to the tune of $60 billion (as was seen earlier) is clearly something that the country cannot afford, the minister said.
The CAD had ballooned to $88 billion in the last fiscal and had hit the rupee value mainly due to high gold imports.
In April and May last year, gold imports had crossed an alarming 300 tonnes. The gold import restrictions were “absolutely necessary” for India’s economic health, the finance minister said, adding that India cannot afford to import $50-60 billion worth of gold annually as it leads to a huge outgo of foreign exchange.
The government then hiked custom duty on gold three times to 10%, while the RBI also imposed curbs. This led to gold imports plunging to about 19 tonnes in November.
