Gold Import in India :The Changing Scenario : 2006-12

Manoj Yawalkar, Dr. M. M. Munshi

Abstract


Increasing Current Account Deficit  (CAD) of India has become a the biggest problem in the development of the Indian Economy.  And has become the world’s third-largest current account deficit facing Country.  It’s facing the danger to reach up to up to  $90 billion. 

The main causes for high Current Account Deficit are :

1)      An unending appetite for gold, resulting in huge imports i.e. hundreds of tones of Gold has been imported against the precious and less stock of Foreign Currency .  This underlined that India is the world’s biggest consumer of the Gold.

2)      It has played a major role in driving the rupee to a record low.

3)      India imported approximately 860mt.tones of gold in 2012.

4)      Gold and silver imports in April-October, 2013 declined by 12.86 per cent to USD 24 billion compared to USD 28 billion in the same period last year due to the restrictions imposed by the Reserve Bank of India to control the gold imports.

The RBI and Central government of Indiatrust that those measures would help to bring down current account deficit. However, the merchants association thinks it would be counterproductive. The RBI restriction would lead to shortage of gold in the domestic market and artificial price rise may take place as well the decline in gold price in international market would not be reflected in local market price because of the RBI order. There is a distinct possibility of gold price rising in domestic market also. These trends in turn would lead to smuggling, black marketing and hoarding of gold which is fatal to the Indian economy. If India can resolve those gold imports related problems, it could solve the country’s economic problems, decline the current account deficit, appreciate the rupee and boost growth.


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References


Bundhun, Rebecca (2013), “Gold imports to India set for record” http://www.thenational.ae/business/industry-insights/economics/gold- imports-to-india-set-for-record

Websites :

•http://in.reuters.com/article/2013/08/19/indiagoldtimelineidINDEE97I08O20130819

• http://www. indianexpress.com/news/cad-in-india-plunges-to--5.2-bn-as-exports-rise-gold-imports-decline-in-quarter/1202268/1

• http://www.indian- express.com/news/gold-imports-fall-95--in-august-ease-cad-woes/1166783/

•http://www.gold.org/investment/statistics/demand_and_supply_statistics/

• http://rbidocs.

rbi.org.in/rdocs/PublicationReport/Pdfs/RWGS02012013.pdf


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