Attributing the surge in gold imports to high current account deficit (CAD), the government today said it is considering schemes like gold deposits, accumulation plans, gold-linked accounts and pension products to curb demand for the precious metal.
In its Mid-Year Economic Analysis tabled in Parliament today, government said gold-backed products will help the investor enjoy benefits of investment in the metal without investing in the physical commodity.
"Now gold backed financial instruments in the form of modified gold deposits and gold accumulation plans, besides gold-linked accounts and pension products linked with the precious metal are some measures being considered to reduce the attraction of a direct investment in bullion and jewellery in the domestic market and check a substantial rise in imports," the review said.
However, gold-linked investments would have to be monitored to see whether the overall demand for the metal actually falls, it added.
The Finance Ministry's Chief Economic Advisor Raghuram Rajan told reporters: "We are worried about gold imports. It is an unproductive instrument. The way to curb holding of gold is to create more attractive financial instruments.
"Some gold linked instruments have been talked about by the RBI but potentially there could be other financial instruments to attract investment."
The current account deficit (CAD), which occurs when a country's total imports are greater than total exports, has been rising on the back of record trade deficits, which in October jumped to a 12-year high of USD 21 billion on the back of rising oil and gold imports.
"We are worried about CAD. We want to take steps to monitor it," Rajan said on the government's worry on high CAD.
The Reserve Bank has unveiled a slew of curbs on gold purchase and financing as imports touched a record high last year, pushing up the current account deficit to a historic high of 4.2 per cent in the year.
In the 2011-12 fiscal, India's gold imports stood at USD 60 billion and the quantum of import was 1,067 tonnes.
A Finance Ministry official said the imports have shown signs of moderation and that gives the government hope that the CAD will be lower this fiscal.
In the April-June quarter of the current fiscal, however, gold imports had contracted by 18.4 per cent year-on-year to Rs 71,912 crore (USD 13 billion).
Gold imports into the country has risen considerably in the last three-four years.