The Government may revisit some of the existing restrictions on gold imports by March-end this fiscal, Finance Minister P. Chidambaram said here on Monday.
This is however contingent on the Government gaining a firm grip over the current account deficit situation, Chidambaram said at an event to mark the 'International Customs Day'.
Chidambaram's remarks are significant as it came close on the heels of Congress Party President Sonia Gandhi's recent letter to the Commerce Ministry seeking removal of gold import curbs.
"Iam confident that by the end of the year, we will be able to revisit some of the restrictions on gold imports. But let me hasten to add we will do so only when we are absolutely sure that we have a firm grip on CAD," he said.
He also said that the long-term way to control CAD was not to indulge in policy repression by restraining the imports of gold, but to increase exports.
Finance Secretary Sumit Bose later confirmed at the same event that the Minister was referring to the financial year ended March 31.
Besides progressively increasing the Customs duty on gold imports from 2 per cent to 10 per cent, the Centre had also stipulated that 20 percent of bullion imports be set aside for re-exports as jewellery.
Chidambaram admitted that clampdown on gold imports had spurred smuggling and between 1-3 tonnes of gold is being illegally brought in every month.
"It is likely that 1-3 tonnes of gold are smuggled every month. But the restrictions on gold imports were absolutely necessary. If we had not imposed restrictions, there was no way we could have managed the balance of payment situation".
Policymakers expect the CAD situation to improve to around $45 billion, much lower than the $88 billion level seen a year ago.
Thanks to curbs on gold imports, the country's bullion imports came down from a level of 300 tonnes in April-May to a level of 45 tonnes in October-November, bringing relief to policymakers.