RBI for removal of restrictions on gold import

Dec 18 2013, 13:38 IST
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SummaryRBI says efforts should be made to maintain the present level of CAD without any significant curbs on inward shipments.

Advocating removal of restriction on gold import as it encourages smuggling, Reserve Bank today 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 per cent of GDP last fiscal.

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

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

In the first half, the CAD stood at USD 26.9 billion (3.1 per cent of GDP), down from USD 37.9 billion (4.5 per cent 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.

The 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.

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