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The RBI is not in favour of removing import curbs on gold at this point of time, though in the longer term it would like to eliminate them, the central bank Governor Raghuram Rajan said on Wednesday.
“I don’t think it is right to say the RBI is in favour of removing gold restrictions at this point. I think the point which we have been making and which I will make again is gold restrictions are a distortion and they are a necessary distortion to provide balance to the current account deficit,” he told analysts after the review of the mid-quarter monetary policy.
“Going forward, we would not like this distortion to persist and we would like to remove it. When we do so in conversation with the Government and what form and how we unwind these restrictions is something we will have to deliberate over time. At this time it would be premature to withdraw these restrictions for a variety of reasons,” he said.
Once the current account deficit stabilises, the RBI will consider “unwinding some of these distortionary actions”, he said.
The comment left the industry and gold jewellers disappointed.
Haresh Soni, Chairman of the All India Gems and Jewellery Trade Federation, which represents over three lakh jewellers in the country, said that there was an immediate need to relax the curbs as the industry had witnessed a massive spurt in gold smuggling. He said that the industry had lost 30-35 per cent business in the last six months.
“We sent our representations the day before the credit policy. Unfortunately, we have not got any favourable response,” he said.
Several retailers Business Line spoke to said that the curbs needed to be removed before January, since the Government would not be able to take any decision once the elections are announced. However, S Subramanian, Chief Financial Officer, Titan Company Ltd, that runs jewellery chain Tanishq, said that any move that would ease restrictions on gold supply in the market and bring down the premium on gold is welcome.
Gold imports have been reduced to a trickle since July, leading to a huge demand-supply gap. Jewellers have suggested that the Government allow gold mining in the country, so that the industry need not depend on imports. Besides, they have also mooted a deposit scheme to attract gold coins and bars idling with investors.
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