With dip in gold imports, the Government has ruled out any further hike in Customs duty and said economic indicators like current account deficit will improve drastically if Indians do not import it for a year.
“I don’t want to become too unpopular,” Finance Minister P. Chidambaram today said when asked if the Government was mulling further duty hike.
Chidambaram’s statement comes in the backdrop of decline in gold imports in the last few weeks.
“Net gold imports averaged $135 million a day in first 13 business days in May till May 20. However, in the subsequent 14 business days, it averaged only $36 million, so gold imports have sharply come down. But I would be happy if they come down even further,” he said.
Huge gold imports have put pressure on CAD, which in turn is affecting the value of rupee.
The Government has hiked the import duty to 8 per cent recently to curb gold demand. The Reserve Bank of India has put restrictions on banks in importing gold.
Pointing out that there are other financial instruments which provide better returns than gold, Chidambaram urged people not to invest in gold.
“Suppose people of India don’t import gold for one year, the whole situation will dramatically change. If we can have it for six months, one year, it will dramatically change the situation of CAD. And we will see its positive impact on every other index that measures the economy — stock market, exchange rates, interest rates,” Chidambaram said.