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Feb 28, 2013, 07.46 PM IST | Source: Moneycontrol.com

Union Budget 2013 - 14: FM spares gold, no further import duty hike announced

Despite stating that the ballooning current account deficit is a bigger worry than fiscal deficit, Chidambaram did not raise import duty on gold further.

Moneycontrol Bureau

Despite stating that the ballooning current account deficit is a bigger worry than fiscal deficit, Chidambaram did not further raise import duty on gold.

Chief Economic Advisor Raghuram Rajan in his maiden Economic Survey on Wednesday reiterated gold and oil were the main contributors to rising CAD .

In January, a two percent hike in gold import duty was announced. The duty was increased from 4 percent to 6 percent resulting in subdued gold demand, prolonged selling by stockists and fall in prices. 

Gold prices in India hit a seven month low on February 20. The actively traded gold contract for April delivery on the Multi Commodity Exchange (MCX) slipped to Rs 29,579/10 grams yesterday, a level last seen on July 19, 2012.

However, this step had little impact on imports as gold imports in the same month rose over 15 percent, so an additional hike in import duty was anticipated.

This had given rise to the expectation that the government may resort to further hike in gold import duty on Thursday.

Market experts believe that a further tariff increases could stem the legal flow at a risk of increased smuggling. India's current account deficit hit a record 5.4% of gross domestic product in the first half of FY13 on the back of high gold and crude oil imports.

Harsha Jethmalani
harsha.jethmalani@network18online.com

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