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The Bombay Bullion Association (BBA) has expressed disappointment over Finance Minister P. Chidambaram statement advising people to desist from buying gold jewellery for the sake of the economy.
Speaking to the media on Friday, Mohit Kamboj, President of the Association said it was quite surprising that the Finance Minister was wishing ill for a sector that was contributing so much to the exchequer in terms of tax and customs duty.
“I am sure that this wish of Chidambaram’s would never come true as people in India can never imagine performing a wedding without gold jewellery. The revenue for the Government through customs duty has gone up from Rs 2,000 crore to Rs 16,000 crore in the last one year due to sustained increase in duty,” he said.
Upset over the ever-rising current account deficit, Chidambaram had said on Wednesday: “I do not want to become unpopular. If I have one wish which the people of India can fulfil, please do not buy gold”.
Reacting to Chidambaram’s statement, Kamboj said: “Assume that the bullion industry becomes zero as per Chidambaram’s wish; what will be the fate of 20 lakh workers’ families? Can the economy afford to declare the banks’ exposure of over Rs 2 lakh crore to the bullion trade as a non-performing asset?”
On behalf of the BBA, Kamboj has written a letter to the Finance Ministry highlighting the industry’s resentment over his statement.
Many measures
The Reserve Bank of India’s measure to curb gold imports through banks may not yield the desired result as 60 per cent of the gold is imported through certified private companies and star export houses.
Genuine bullion importers will now be forced to look at alternative channels, what with banks demanding the entire money as margin even before importing the gold consignment, he said. As it is, there is a sharp surge in smuggling with the series of hikes in customs duty, said Kamboj.
Gold import and jewellery demand may remain stable on the back of the recent fall in prices, he said.
The country has been receiving a huge quantity of raw gold from South Africa for refining and minting into gold coins and bars, Kamboj added.
“There is a duty concession on these raw gold imports if the refinery is based out of less developed regions,” he said.
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