With a staggering gold imports at USD 15 billion in the last two months, the government today said there will be corrective measures including a possible sale of gold coins by banks to check the alarming trend that has put huge pressure on current account deficit (CAD).
The Financial Stability Development Council (FSDC), chaired by Finance Minister P Chidambaram, met and discussed the issue.
For May, the import of gold was 162 tonnes, Chidambaram said after the meeting.
"The Council noted with concern the significant increase in gold imports in recent months and deliberated on the issues involved in this regard," the Finance Ministry said in a statement after the meeting.
Department of Economic Affairs Secretary Arvind Mayaram too hinted that the government could take more steps to reduce gold imports, which may include banning sale of the yellow metal by banks.
"More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banning gold coin sale by banks," he said.
The government and Reserve Bank have been taking steps to reduce gold import. High import has widened the current account deficit (CAD), which hit a record high of 6.7 per cent of GDP in October-December quarter of 2012-13.
Commerce and Industry Minister Anand Sharma also expressed serious concern over the issue.
"Yes, I met the FM and discussed it. We have serious concerns. We cannot allow a situation where gold (imports) in the last two months have reached a stage where it is causing huge stress," Sharma said after the meeting.
"There will be corrective (measures), banks have taken corrective measures. And I am going to review it. And we will ensure that only for actual users gold is imported not for trading purposes. Except gems and jewellery and the gold refinery..., I don't think it should be allowed for trading," he said.
Gold imports from India, the world's largest consumer, stood at 860 tonnes in 2012.
Later speaking at a function, Sharma said, "Indians have an insatiable appetite for gold. Import of gold is our shared concern. Last two months, we have imported gold worth USD 15 billion. Can we afford it ? Are people losing confidence in household savings in banks ?"
"That four per cent (savings rate) has not been a healthy drop. In my understanding our investment must go up to 38-39 per cent, savings at 35-36 per cent. We have to make an effort. The only way to manage CAD is to ease pressure on trade account deficit," he said.
