New Delhi, Jul 22 (Agencies): The Bharatiya Janata Party government is likely to continue with the checks on gold imports put in place by the previous regime, Finance Minister Arun Jaitley indicated on Tuesday.
Jaitley said the government is inclined to continue also with the other steps taken by the previous government since these have helped check the current account deficit.
“Each step is being continued...efforts are being made to continue each of these steps,” Jaitley said while referring to measures taken by the Congress-led United Progressive Alliance government last year to contain the CAD, which had touched a record high of 4.7 per cent of gross domestic product, or $88.2 billion, in 2012-13.
Gold is India’s second-biggest import item after crude oil, and just last month imports of the yellow metal surged by 65 per cent after the government relaxed some of the restrictions on gold imports imposed in 2013 with the Reserve Bank of India.
In the run-up to the elections, the BJP had spoken against import checks as this increases smuggling.
The real crisis on CAD front started in May 2013 when the US Federal Reserve announced its intent to taper its asset purchases or roll back quantitative easing.
At that stage, Jaitley said, the Finance Ministry started taking measures, including “harsh” steps on gold imports to contain CAD.
The import duty on gold was raised thrice to take it to 10 per cent. The RBI, among other steps, tied gold imports by jewellers with exports of jewellery (in 80:20 ratio).
”The measures taken by the government and the RBI helped contain India's current account deficit to $32.4 billion in 2013-14 and build up foreign exchange reserves to a level of $316.4 billion on July 4, 2014,” Jaitley said in reply to questions in Rajya Sabha.
He said the restrictions on gold import ”apparently seems to have worked” and added the government is making efforts to contain CAD at “containable level”.