3,000kg Of Gold Being Smuggled Into India Every Month, Admits FM

NEW DELHI – Finance ministerP Chidambaram on Mondayacknowledged a spurt in goldsmuggling in the wake of higherduties and other curbs on theimport of the yellow metal intothe country. While estimatingillegal shipments of up to3,000kg in certain months — arecord by all accounts — theminister justified the restrictions,citing high currentaccount deficit (CAD) but indicatedthat some of the tighteningmay be eased in the next fewmonths. The government hadincreased customs duty on goldto 10% and later RBI imposedimport restriction by linking it toexports in an attempt to lowerthe ballooning CAD which was$88 billion last fiscal. This year,the government hopes to containCAD at around $50 billionby bringing down gold imports.The finance minister, who wasspeaking at the internationalcustoms day function here, saida review on the decision tolower duties or remove otherrestrictions was possible onlyafter March even as he saidmonthly smuggling of gold was1-3 tonnes after imposition ofthe restrictions.”I am confident that by the endof this year we will be able torevisit some of the restrictionson gold import but we will do soonly when we are absolutely surethat we have a firm grip on theCAD,” he said. Gold imports,which touched a high of 162tonnes in May, fell to 19.3tonnes in November in the wakeof a series of curbs by both thegovernment and the RBI.”Iknow gold smuggling hasincreased … But the restrictionson gold import were absolutelynecessary because it is theserestrictions which have broughtdown gold import which inApril and May had crossed 300tonnes,” Chidambaram said.”If we had not imposed restrictions,there was no way we couldhave managed balance of paymentsor the current accountdeficit,” he said. Chidambaramsaid after implementation ofgoods and services tax, the relativecontribution of customsduty to revenue would decline,but it would continue to performa critical function as sentinelsof our borders and facilitatorsof legitimatetrade.Speaking to reporters outsideNorth Block later, economicaffairs secretary ArvindMayaram said the CAD currentlywas below $50 billion andexpressed confidence thatdeficit would be within thebudget estimates.