After raising customs duty on gold, the government today said it may restrict import of certain commodities if current account deficit (CAD) crosses 3.5% of the Gross Domestic Product (GDP).
"Curtail Current Account Deficit to the extent feasible because otherwise India may face problems in the years to come. If we cross Current Account Deficit of 3.5%, we need to see which are the imports which can be curbed without adversely impacting growth," Finance Secretary RS Gujral said at post Budget deliberation organised by CII.
CAD which includes deficit in external trade of goods, services besides net investment income stood at 2.9% of GDP last fiscal.
For the current fiscal CAD as a proportion of GDP expected to be around 3.6% for 2011-12.
"Straightaway, the one which we saw was gold. Roughly about $60 billion worth of gold import has already taken place in 11 months of 2011-12," he said.
Finance Minister Pranab Mukherjee in his Budget speech last week had said, "One of the primary drivers of the current account deficit has been the growth of almost 50% in imports of gold and other precious metals in the first three quarters of this year."
"So we did increase (customs duty) by 2% a couple of months back. That 2% has been increased to 4%," he said.
The basic idea is to restrict the import of the gold, he said, adding, the savings from them is directed towards financial savings and the real sector rather than being caught up in unproductive gold assets.
On the disinvestment, Gujral said the government expects to mobilise Rs 30,000 crore in 2012-13 from sale of shares of public sector companies.
"We are much more better prepared in the current year for the disinvestment. There are already certain approval from the government, certain companies are in pipeline. Therefore, we are much better prepared," he said.
He also said increase in indirect taxes would have some impact on inflation in the short run.
"Endeavour to be made that it does not lead to higher inflation," he said, adding, but taxes are still lower than 2007 level.
Clarifying on Vodafone issue, Gujral said "we also want to have certainty on taxes. So this is just a clarification."
The Vodafone transaction was not taxed either of the country, it is susceptible to 10% tax in India, he said adding "why should such transaction not subject to any tax."
Meanwhile, Central Board of Excise and Customs Chairman SK Goel said the Department will examine the issue of reducing duty on supply of power from a Special Economic Zone to the domestic area in the light of elimination of duty on coal import.
