New Delhi, Nov 18: In the wake of surge in gold imports, the government would soon impose some curbs on its inward shipment to prevent current account deficit (CAD) from going out of hand.
"Things are being worked out by the Finance Ministry and some announcements (restrictions) may come in a day or two," a source said. Gold import surged almost four times to USD 4.17 billion in October from USD 1.09 billion in the same month a year ago. In value terms, gold imports have touched 150 tonnes in October, as against 24 tonnes during the same period a year ago.
The high imports have pushed up the country's trade deficit to USD 13.35 billion as against USD 10.59 billion in October 2013. Last week, the government held a meeting to discuss ways to curb the rising inward shipment of the precious metal.
The Reserve Bank of India in August last year had imposed severe restrictions on gold imports and raised import duty on the precious metal to 10 per cent to check burgeoning current account deficit and sliding rupee.
The steps by the central government though helped lower gold imports substantially, also increased instances of smuggling. In May, the previous UPA government eased certain rules and allowed private agencies to import gold under 80:20 scheme.
This facility was available to select banks only and other entities were barred from importing the metal. Under the 80:20 scheme, an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.
The CAD, which had touched a record high of USD 88.2 billion or 4.8 per cent of GDP in 2012-13 is estimated to have come down to below USD 32.4 billion or 1.7 per cent of GDP in 2013-14. In April-June quarter of the current fiscal, the CAD narrowed sharply to 1.7 per cent, from 4.8 per cent of the GDP a year ago.