Rajan hints at gradual easing of gold import curbs

RBI Governor said the timing on relaxation on gold imports needs to be discussed with the government

After successfully weathering the high CAD scare in the just-concluded fiscal, RBI Governor Raghuram Rajan today favoured easing of curbs on gold imports but stressed on the need to do it in a slow and steady manner.

"I think what we have to do is slowly and steadily take actions to remove some of these curbs (on gold imports)," Rajan told analysts at the post-policy concall with researchers and analysts today.

He, however, said the timing on relaxation on gold imports needs to be discussed with the government.

"It would be useful for some of the big uncertainties facing us to be behind us rather than still in front of us before major actions are taken up in this regard, but I don't rule it out," he said.

Earlier this week, Finance Minister P Chidambaram had indicated that the government might further ease restrictions on gold imports after the monetary policy.

"Some relaxations were made a few days ago when more banks were allowed to import gold. We could consider some more relaxations in consultation with RBI," he had said.

The government had raised raised customs duty to 10 per cent on gold from 2 per cent earlier.

It can be noted that gold imports has been the second biggest import bill after crude, leading to higher CAD, which had touched 4.8 per cent of GDP in FY13. However, with the curbs on gold imports, CAD had been brought to about USD 35 billion in FY14, according to Chidambaram.