After an unexpected removal of the 80:20 scheme, the Reserve Bank of India (RBI) might introduce a gold quota system for individual importers for distribution among jewelers. Under this 80:20 scheme, jewellery makers had to mandatorily export 20 percent of the imported gold before placing further shipments. This scheme was introduced by the RBI in August 2013 following a sharp increase in gold imports in April and May the same year.
Gold import was recorded at 142.5 tonnes in April and 162 tonnes in May, pushing India's Current Account Deficit (CAD) alarmingly high at 4.7 percent of FY14. During the first quarter ended June, however, the government reported CAD at 1.7 percent, well below the comfortable level of 2 percent, which prompted RBI to abolish the supply restriction.
While the World Gold Council maintained India's gold demand at 850-950 tonnes in the current calendar year, a marginal decline from the previous year, bullion dealers fear a sudden spurt in demand ahead of the wedding and festive seasons due to continuous falling prices. As a consequence, the RBI might put some restrictions that could be in the form of 'importer specific quota' in the coming days.