The Reserve Bank of India, grabbling with a surge in gold imports last month, could support some restrictions for trading houses but two senior policymakers involved in the bank’s decision-making said officials were also wary of overreacting.
India, the world’s second-largest gold consumer over the past year, is wrestling with its response to a fourfold jump in gold imports in October. That spike raised fresh concerns over the strain to the country’s balance of payments.
A senior finance ministry source told Reuters on Tuesday the country would soon announce measures set to center on import restrictions for private trading house that were eased earlier this year. Private jewellery exporters account for the bulk of demand for gold.
But the country has yet to announce any steps, and the two policymakers said on Friday there was no agreement yet.
“No decision has yet been taken on curbing gold imports,” said one of the policy makers, who declined to be named.
India sharply restricted gold imports in early 2013 as the country battled a balance of payments crisis triggered by the U.S. Federal Reserve’s announcement that it would start to ease its programme of quantitative easing.
But it eased some of the measures after India’s current account deficit fell sharply from the record high of 4.8 percent of gross domestic product in the fiscal year ended in March 2013 to 1.7 percent in the quarter ending in June.
That improvement is providing comfort for the central bank, even as gold imports jumped in October to $4.18 billion.
“Right now, even if gold imports continue at the current level every month, the current account deficit will not cross 2 percent. We are comfortable up to 2 percent,” said one policymaker.
Restrictions on trading houses, though possible, would have to be limited, he said.
“These could be only some cosmetic restrictions like eligibility criteria,” the policymaker said.