India can afford gold imports of $30 billion a year

December 12, 2013 at 09:15


A key policymaker in the government has said India can only tolerate $30 billion worth of gold imports. “As inflation comes down and as financial assets become more attractive, perhaps this part of demand for gold can come down and we can probably tolerate $30 billion worth of import of gold,” Prime Minister’s Economic Advisory Council chief C Rangarajan said at the Delhi Economic Conclave.

Gold imports inflated India’s current account deficit to a historic high of 4.8% of GDP in 2012-13. Earlier, FM P Chidambaram said India can neither finance a CAD of the order of $ 88 billion as it did in 2012-13 nor can it afford to pay for import of gold in the order of $50 billion or more. The government as well as Reserve Bank took a slew of measures to curb gold imports. The measures showed results as in-bound shipment fell significantly. As per the latest data, gold and silver imports declined 80.55% to $1.05 billion.