NEW DELHI: The Union Finance Ministry on Sunday made it clear that it cannot ease gold import curbs now, pointing at the possible adverse fallout of developments in Iraq and other countries on the country’s Current Account Deficit (CAD) situation.
“CAD problem has been contained but we have to be very cautious. International developments around Iraq and international currency volatility are there, we have to see forex inflows stabilise. Then only one can look at (easing of gold import curbs),” Revenue Secretary Shaktikanta Das told a news agency.
Citing geo-political conflicts in the Gulf and other Middle Eastern countries, Das feared they can hike oil prices and inflate the import bill. “One has to wait before we make any changes. Things can go out of control, so one has to be cautious. Gold import curbs are in place. Situation is so fluid and volatile... CAD is still a concern. We are out of the problem, but we would like to wait and watch,” he asserted.
CAD, which is the excess of foreign exchange outflows over inflows, touched a historic high of $88 billion or 4.7 per cent of GDP in 2012-13, mainly due to rising imports of gold and petroleum products. In order to check rising CAD, the government had raised import duties on the yellow metal to 10 per cent, while RBI imposed curbs on import of gold and also laid down various pre-conditions for inward shipments of the precious metal. It came down to $32.4 billion or 1.7 per cent of GDP in 2013-14.
Union Finance Minister Arun Jaitley in his maiden Budget had refrained from lowering duties on gold despite demands from jewellery industry.
(With agency inputs)