The Reserve Bank of India (RBI) and the finance ministry are considering fresh curbs on gold imports, as inbound shipments of the yellow metal surged four times to $4.18 billion in October from a year ago.
“With the surge in gold imports, it warranted a relook. Discussions are still going on between RBI and the government. Once we know what the discussions are, a further view will be taken,” RBI Deputy Governor S S Mundra told reporters on Monday.
Crude oil and gold are two major items adding to the import bill. This time, the government has little comfort on oil import, as global crude oil prices are trading low.
Gold imports touched 115-120 tonnes in October, as against 24 tonnes a year ago. Officials from the central bank and the finance ministry had met on Thursday to discuss ways to restrict inbound shipments of gold but no final decision was taken.
The increase in gold imports will widen the trade deficit, which in turn will make the current account deficit (CAD) swell. Curbs on gold were introduced by former finance minister P Chidambaram to contain the CAD, which had touched a record high of $88.2 billion or 4.8 per cent of gross domestic product in 2012-13.
However, in May this year, some of those restrictions were eased after imports came down and the CAD narrowed to 1.7 per cent in 2013-14. In the April-June quarter, the CAD came down to 1.7 per cent from 4.8 per cent a year ago. Another unintended consequence of gold curbs, particularly a 10 per cent duty on gold import, was increase in smuggling.
RBI is likely to release its final guidelines on payments banks by the end of this month, followed by norms for small banks next month.
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