Imports of gold and silver have risen substantially during the period 2009-12, as per government data. Imports of the precious metals increased to $61.5 billion in FY ‘12 as compared to $42.5 billion in 2010-11 and $22.8 billion in FY ’09. This information was given by Minister of State for Finance, Namo Narain Meena in a written reply to the Rajya Sabha. Meena has also stated that the volatility in the prices of gold and silver have been noticed due to their volatility in the prices of these commodities in the international markets.
India is the largest consumer of gold in the world as per the World Gold Council and a net importer of the bullion. Of late the imports of the precious metal have been on the rise leading to the increase in the current account deficit (CAD) of the country. The CAD of India increased from 3.3% in Dec 2010 to 4% on Dec 2011.
Apart from petroleum products, imports of gold and silver were major contributors towards the deficit. In an attempt to discourage the imports of gold and silver, the Finance Minister in Budget for 2012-13 proposed to increase basic customs duty on standard gold bars, gold coins of purity exceeding 99.5% and platinum from 2% to 4%. Besides, customs duty on non-standard gold was increased to 10% from 5%. The RBI too has taken measures to curb the loans given out by NBFCs against gold.
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