No proposal to reduce import duty on gold: Chidambaram

BT Online Bureau   New Delhi     Last Updated: March 4, 2013  | 00:00 IST

Finance Minister P Chidambaram on Monday said the government is not considering any proposal to reduce import duty on gold in view of the impact it will have on the country's current account deficit (CAD).

In January, the government had hiked the import duty on gold and platinum from 4 per cent to 6 per cent - a move aimed at curbing imports of the precious metals to check the widening CAD.

CAD is the difference between inflows and outflows of foreign currency.

"There is no such proposal under consideration to reduce the import duty on gold, taking into account the likely impact on the CAD," Finance Minister P Chidambaram said in Lok Sabha in a reply to a query.

India's CAD widened to 4.2 per cent of GDP in 2011-12, and had touched a record high of 5.4 per cent during in the July-September quarter of the current fiscal.

Chidambaram said the domestic prices of precious metals have increased in tandem with international prices and as they are demand driven, the government has a limited role in controlling the demand.

Revenue generated from import of gold in the April-January period of current fiscal stood at Rs 8,135 crore.

The government had also proposed to provide link between the Gold Exchange Traded Fund (ETF) and the gold deposit scheme with an objective to release a part of gold physically held mutual funds under Gold ETF.

The last three years have seen a substantial rise in gold imports contributing significantly to the current account deficit along with oil.

With PTI inputs

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