Finance Minster P Chidambaram Thursday reiterated his appeal to public to control their craving for gold.
Chidambaram was addressing a press conference to detail the steps being taken by the government to get the economy on track. "If we can have for six months or one year almost minimal gold imports into the country, it will dramatically change the situation on the current account deficit (CAD) and we will see its positive impact on every other index that majors the economy, stock market, exchange rate, interest rates," he added.
Quoting statistics, Chidambaram said the net gold imports averaged USD 135 million per day in the first 13 days of May till May 20. However, the subsequent fourteen business days, it averaged only USD 36 million.
This steep fall in gold imports was facilitated by a number of measures the Government took to dissuade people from buying gold. The Government hiked the import duty on the highly coveted metal from 4 to 6 percent in January followed by a more recent hike in June taking the import duty to 8 percent.
The central bank too made some moves towards lowering gold imports by mandating all letters of credit (LCs) to be opened by nominated banks and agencies only under 100% cash basis. The RBI also mandated all gold imports to necessarily be on documents against payment (DP) basis meaning the imports on documents against acceptance (DA) basis would not be permitted.
"I am happy that all my appeals are being heeded partly by the people of India. So, gold imports have sharply come down but I would be happy if they come down even further," said Chidambaram who also recommended inflation-indexed bonds as an alternative to gold investment.