Finance Minister P Chidambaram has exuded confidence that India’s current account deficit (CAD) will be contained below $60 billion this financial year as against an earlier estimate of $70 billion. The CAD, the difference between the inflow and outflow of foreign exchange, had touched an all-time high of $88.2 billion, or 4.8% of GDP, in the last fiscal.
Gold imports were one of the major reasons that pushed CAD to a record high in the previous financial year. While, slew of efforts this time around have been taken by India’s apex bank and government to curb gold import and thereby narrow down CAD. So far in 2013, RBI restricted gold imports on a consignment basis by banks. A transaction tax of 0.01% was imposed on non-agricultural futures contracts including precious metals. Besides, India's biggest jewellers' association asked members to stop selling gold bars and coins, and the import duty on gold was raised to 10 %.
Chidambaram further underscored that both Reserve Bank of India and government were prepared to deal with impact of US Federal Reserve’s gradual stimulus withdrawal and assured that number of measures were being taken so that the event of tapering does not takes the market by surprise and just has minimal impact.
Gold imports were one of the major reasons that pushed CAD to a record high in the previous financial year. While, slew of efforts this time around have been taken by India’s apex bank and government to curb gold import and thereby narrow down CAD. So far in 2013, RBI restricted gold imports on a consignment basis by banks. A transaction tax of 0.01% was imposed on non-agricultural futures contracts including precious metals. Besides, India's biggest jewellers' association asked members to stop selling gold bars and coins, and the import duty on gold was raised to 10 %.
Chidambaram further underscored that both Reserve Bank of India and government were prepared to deal with impact of US Federal Reserve’s gradual stimulus withdrawal and assured that number of measures were being taken so that the event of tapering does not takes the market by surprise and just has minimal impact.
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