A letter dated July 26, 2014, written by the India Bullion and Jewellers Association (IBJA) to the then Governor of the Reserve Bank of India, Raghuram Rajan had accused the UPA government of deliberately yielding to cronies by changing the gold policy days before demitting office.
MoneyControl reported that a decision was taken on May 21, 2014, five days before the UPA government officially demitted office, allowed 13 'star trading houses (STH)' and 'premier trading houses (PTH)', including Choksi-led Gitanjali Gems to import gold and sell about 80 percent of their total bullion shipment in local markets under the so-called 80:20 scheme. This, it now turns out, encouraged gold hoarding and preferentially allowed these traders to profiteer by artificially inflating retail prices.
IBJA also said that the RBI circular on May 21, 2014, sidestepped nationalised banks, which have been the backbone support of our bullion importing and jewellery exporting members by allowing certain private sector export houses to import gold up to two tonnes at one time, even for those who are not in the business of bullion and gold jewellery.
Further, Rajan was also asked to make a prudent appraisal of the decision and check loopholes before it was too late. "Certain private players who were calling the shots in the domestic bullion market in the pre-80:20 era had considerably lost the lucrative trader volumes and had been lobbying hard since the scheme was introduced," IBJA said in the letter.
The letter also said, "Having achieved the targeted current account deficit (CAD) level, the outgoing government did not care for future sustenance of the CAD and deliberately yielded to the cronies by effecting last minute changes in the gold policy."