NEW DELHI: Finance minister P Chidambaram said that the government may look at relaxing restrictions on goldimport, but asserted that a developing country like India cannot afford to import gold worth $50-60 billion a year as it leads to foreign exchange outgo.
“There are pros and cons to relaxing restrictions. We will weigh them carefully and take a decision….We have to keep in mind the goal is to contain the CAD at a level where it can be safely and fully financed,” he said after presenting interim budget.
The finance minister, however, said he cannot make any announcements because the Parliament is in session. High gold import was one of the major reasons for India’s record current account deficit (CAD) of $88 billion during the last fiscal. In the first two months of the current fiscal, the imports had crossed 300 tonnes.
Last year, both the RBI and the finance ministry had come up with a slew of measures to contain gold import in the country. The government is looking to contain gold imports at 850 tonnes this fiscal as against 950 tonnes the corresponding period last year. The measures are expected to lower the import bill by $4 billion.
Chidambaram said the curbs on gold import were “absolutely necessary” for India’s economic health and the restrictions have helped. Gold imports fell to just 21 tonnes in November against a record 162 tonnes in May 2013. This fiscal, the CAD has been contained at $45 billion, and the finance minister indicated that it may further fall.