Worried over worsening balance of payment situation, the Economic Survey today asked the government to take steps to discourage import of gold and consumer goods.
A trade deficit of more than 8% of GDP and current account deficit (CAD) of more than 3% is a sign of growing imbalance in India's Balance of Payments (BoP), the survey said.
"There is scope therefore to discourage unproductive imports like gold and consumer goods to restore balance," it added.
India's gold imports went up by 64% to $38.3 billion during the April-October period of this fiscal.
BoP summarises transactions between a country and the rest of the world, and the account classifies transactions under two heads - capital account and current account.
In the second quarter, BoP showed only a marginal surplus of $276 million compared to $3.29 billion a year-ago. During the first quarter, BoP surplus was at $5.44 billion, taking the total account showing an overflow of $5.7 billion for the first half.
The survey pointed out that high trade and current account deficits, together with high share of volatile FII flows are making India’s BoP vulnerable to external shocks.
"Greater attention therefore has to be given to improving the composition of capital flows towards FDI," it said.
CAD has increased to $32.8 billion in the first half of 2011-12, as compared to $29.6 billion during the corresponding period last fiscal, mainly on account of higher trade deficit.
FII inflows showed marginal increase to $29.4 billion in 2010-11, from $29.0 billion in 2009-10.
