Gold duty hike tackles the symptom, not the cause

Tags: Commodities
Nomura says India's hike in the gold import tax will only shift gold shipments to "unofficial channels".

"Therefore, in our view imposing import duty tackles the symptom, not the cause," Nomura says in a note.

India's gold imports likely to ease to $44 billion in fiscal 2014 from an estimated $48.3 billion in fiscal 2013 in value terms, marking a 0.2 percentage point drop, Nomura estimates.

Nomura says current account deficit could moderate to 4.3 percent of GDP in FY14 from an estimated 4.9 percent in FY13, "remaining above sustainable levels," due to high oil prices and continued domestic supply-side constraints that boost imports.

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