What is the 80:20 gold scheme: How it helped the likes of Choksi for round tipping of black money
Amidst the investigations into the Rs 12,000 crore PNB scam, the BJP has raked up a gold import scheme that was introduced by the UPA. The allegation is that the scheme introduced by the former finance minister of India, P Chidambaram had aided jewellers such as Nirav Modi and Mehul Choksi.
It was an 80:20 scheme that was introduced in August 2013 and repealed in November 2014. Union Minister Ravi Shankar Prasad alleged that on May 16, 2014, Chidambaram had given his blessings to 7 private companies under the 80:20 scheme and one of them was Gitanjali.
What is the 80:20 scheme:
The 80:20 scheme was launched in August 2013. It is alleged that the UPA had eased some of the curbs and private agencies were allowed to import gold under the scheme. The scheme mandated that traders export 20 per cent of all gold imports while retaining 80 per cent for domestic use. This came about at a time when the government was trying to curb gold imports to overcome the current account deficit.
In November 2014, the NDA removed the restrictions on gold imports and scrapped the 80:20 scheme. The scheme once again came under the scanner when the Public Accounts Committee raised questions. It questioned the need to implement the scheme in such a hurry despite the DRI stating that it could lead to black money hoarding and money laundering.
Further, the committee raised questions about Chidambaram's role while also pointing to the report of the Comptroller and Auditor General in 2016 which had said that the scheme had caused a loss of 1.3 lakh crore to the exchequer. The report had said that to support the earning of one US dollar which was Rs 60 at that time for the jewellers, the government had to bear the expenditure in the form of duty foregone of Rs 221.75.
The report indicated that the scheme was being used by the jewellers including Choksi for round tipping of black money and money laundering. This meant that the money that went out as black came back to the country as white.