The Reserve Bank will closely study the impact of scrapping of 80:20 rule on gold imports before deciding on others measures to curb the demand for the precious metal, Deputy Governor HR Khan said today.
His comments came a day after the RBI Governor Raghuram Rajan hinted that government might change duty structure for gold.
Replying to a query whether RBI may look at any other measure on curbing gold demand, Khan said, "We will see going forward how it (scraping of 80:20 gold import rule) is happening."
He said the Reserve Bank of India (RBI) is reasonably comfortable on the current account deficit front following the slide in crude prices.
Declining oil price was was also one of the reasons for lifting 80:20 restriction on gold imports, he added.
"Now we are reasonably comfortable from the current account point of view because of oil price fall. So taking all these into account a view has been taken that we will give up the 80:20 gold import scheme and see how it is panning out."
The 80:20 rule had made it mandatory for importers to make value addition and then export a 20 per cent of their imports, to partially offset the forex outgo.
After the monetary policy review yesterday, Rajan had said that enough room had been created after the slide in crude prices.
Rajan had said the "government decided that it was probably the best decision at this point to scrap this rule", adding there are some requests to change the duty structure and that government will view and take a decision on it.
He had also said that the move to do away with the restrictions, which created certain distortions, was a "reasonable" one.
While he did not specify what these distortions were, there have been apprehensions that the controversial 80:20 scheme was leading to increased smuggling of gold and giving undue benefits to a select importing entities.
The current account deficit (CAD) had hit 4.7 per cent of GDP in FY 2013. The mismatch improved to 1.7 per cent of GDP in FY 2014 and stood unchanged in the first quarter of the current fiscal.
The government had also hiked duty to 10 per cent to contain the widening CAD.
The reasons for rising CAD were attributed to high imports of oil and gold.
The Brent crude had hit a five-year low of USD 67 a barrel last week and was trading around USD 71 today.
The measure to liberalise gold imports had raised eyebrows because it came in the aftermath of a record surge in gold imports in October at about 150 tonne.
When asked if RBI may look at any other measure on curbing gold demand, Khan said, "We will see going forward how it (scraping of 80:20 gold import rule) is happening".
