RBI move to ease gold import norms unlikely to increase CAD

Tags: News
The Reserve Bank's move to ease gold import norms is unlikely to exert upward pressure on the current account deficit, industry body Assocham today said.

The RBI had earlier eased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.

"Assuming a monthly average gold import of 40 tonnes for first quarter of 2014-15 and 80 tonnes for the remaining three quarters, total imports for the current fiscal will tantamount to 840 tonnes vis-a-vis 586 tonnes in 2013-14.

"While the 80-20 rule would still put some downside pressure on our estimate, we believe the impact would be offset by the likely upside risk that phased normaliaation of custom duty could bring-in," Assocham President Rana Kapoor said.

The central bank had tied imports with exports and prescribed a 20:80 formula, which was available to select banks only and other entities were barred from importing the yellow metal.

Under the 20:80 scheme an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.

India's current account deficit narrowed to 1.7 per cent of GDP in FY14, from 4.7 per cent (USD 87.8 billion in FY13), while in the March quarter it shrunk massively to 0.2 per cent of GDP, which is a lowest since March 2009.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Banks might be bracing for intense rate war for retail loans

    While select small banks have been slashing their deposit rates by five to 10 basis points over the past few weeks for short term adjustments to avoid

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

<b>Riskfactor</b>: Intertemporal choices

Intertemporal choice is the study of the relative value people ...

Parvez Imam

Why we all have blood on our hands

What does the Jammu and Kashmir flood make us think? ...

Dharmendra Khandal

The peculiar possibilities of animal poop

You can tell a lot about an animal by its ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture