Stepping up its efforts to control the Current Account Deficit (CAD) ahead of a festival season, the government has hiked refined gold bars for a third time in eight months to 10% from the earlier 8%. Besides, it also upped the import duty on silver to 10% from the earlier 6%, and the factory gate duty on gold bars to 9% from 7%. Consequently, the government is targeting revenues of Rs 4,830 crore from the hike in customs duty. Though, with this announcement, gold and silver prices are set to become expensive.
Gold and silver imports from a long have been held responsible for widening CAD which rose to record 4.8% of GDP in 2012-13. The country, which is the world's biggest buyer of gold has been trying to curb imports of the yellow metal, the second biggest imported item after crude oil. Recently, the Reserve Bank of India (RBI) required a fifth of all gold imports to be used for export, usually in the form of jewellery.
Finance Minister P Chidambaram a day earlier has unveiled a slew of measures, including easier overseas borrowing norms to fetch an additional $11 billion dollars this fiscal to arrest rupee fall and check the burgeoning current account deficit (CAD). FM is confident that these measures will help contain the deficit at $70 billion for the fiscal year ending in March, or an estimated 3.7% of Gross Domestic Product (GDP), well below the record 4.8% in the previous fiscal year.
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