New Delhi, Nov. 17: The Reserve Bank of India is in discussions with the government to curb gold imports that have jumped four times to $4.17 billion in October from $1.09 billion a year ago, putting pressure on the current account deficit.


 


Rising gold imports have already ratcheted the trade deficit up to $13.35 billion in October against $10.59 billion a year ago.


 


'With the surge in gold import which has been witnessed, it warranted a re-look. Discussions are still going on between the Reserve Bank of India and the government of India. Once we know what are the discussions, a further view will be taken,' RBI deputy governor S.S. Mundra said here.


 


The government last week held a meeting to discuss ways to curb the rising inward shipment of the precious metal. Gold imports have touched 150 tonnes in October against 24 tonnes a year ago.


 


A fall in exports in October has added to the deficit woes.


 


Analysts warned that the situation may worsen if a weak global economy causes a bigger dent in exports - a prospect made more plausible after Japan unexpectedly slipped into recession in the third quarter.


 


Exports fell 5 per cent in October to $26.1 billion - the first decline since March - because of a dip in shipments from major sectors such as engineering, pharma and gems and jewellery.


 


Exporters attributed the fall to subdued demand in the US and European markets.


 


'Markets are not getting better. EU is going bad. The numbers are disappointing. The government is also not announcing any measures to help us,' Federation of Indian Export Organisations president Rafeeq Ahmed said.


 


Overall, imports grew 3.62 per cent to $39.45 billion.


 


Gold imports surged nearly 450 per cent in September, while they rose over 175 per cent in August, overcoming the hurdle of a 10 per import duty on the yellow metal.


 


Aditi Nayar, senior economist with rating agency Icra, said, 'Gold imports have surged in September-October 2014 ahead of the festive and wedding season, following the decline in the global price of the precious metal, despite the moderation in headline inflation and weak kharif harvest. Based on the prevailing import norms, the gold import bill in 2014-15 may be similar to the level of $29 billion in fiscal 2013-14.'


 


'Amidst declining prices, it is expected that jewellers imported higher quantities of gold ahead of the festive and wedding season leading to gold imports of $4.2 billion in October, up from $3.8 billion in September. Further, speculation about restoration of restrictions on gold import may have compelled traders to bring forward some imports,' Yes Bank said in a report.


 


Jaitley pitch


 


Ahead of a quarterly review of the monetary policy by the RBI, finance minister Arun Jaitley today raised the pitch in favour of a rate cut.


 


'I am quite clear in my mind that the cost of capital has to come down. Inflation has moderated, global fuel price has eased. Therefore, if the RBI, which is a highly professional organisation, in its wisdom decides to bring down the cost of capital, (it) will give a good fillip to the Indian economy,' Jaitley said at a conference hosted by Citibank.


 


Industry associations - CII and Ficci - have also been clamouring for a policy rate cut.