In a move to contain the current account deficit (CAD) for the current fiscal, a RBI committee, in its report, has suggested limits on the gold import by banks and other government agencies like STC and MMTC, which account for about 56 per cent of the total import of the precious metal. The country's CAD touched a record high of 5.4 percent of GDP or $22.3 billion in the July-September quarter on account of higher capital outflows and decelerated growth in net export of services.
Worried over the rising gold imports, the RBI's report on gold loans stated ‘setting value or quantum limits for canalising agencies and banks to import gold can also reduce the demand for gold. Gold imports in the April-December period of 2012 stood at $38 billion. While, in FY12 it was $ 56.5 billion.
As per the RBI report, in the prevailing scenario of global economic slowdown, it has become necessary to check the gold import, which has widened the country’s current account deficit. The canalising agencies like MMTC, STC and the nominated banks play a major role in gold imports into the country. These organisations sell the imported gold to jewellery manufacturers and at retail level, it added.
However, the RBI's working group of gold loans also recommended that such limits can be reviewed periodically d the government may remove such restrictions once the Current Account Deficit (CAD) comes down to sustainable level.
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