Mentioning the recent dip in gold imports, the finance minister ruled out any further hike in import duty on gold. In the first 13 business days in May, net gold import averaged $135 million a day, however, it slowed down to an average of only $36 million in the subsequent 14 business days.
Finance minister P Chidambaram urged people not to invest in gold saying that other financial instruments provide better returns. Economic indicators like current account deficit (CAD), exchange rates and interest rates will improve drastically if Indians do not import it for a year, he added.
High gold imports have been putting pressure on CAD, which in turn is affecting the value of rupee. Further, persistent dollar demand from banks and importers also added to the fall in rupee value. In April- May period, India’s gold imports touched around 270 tonnes, while, the CAD widened to a record high of 6.7% in the third quarter of FY13.
However, to restrain the gold imports, the government has hiked the import duty to 8 per cent recently. Further, the Reserve Bank of India (RBI) has also put restrictions on banks in importing gold.
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