Buoyed by the sharp contraction in gold imports in the July-September quarter, the Finance Ministry on Tuesday expressed confidence that imports could be reined in at 800 tonnes this fiscal. This will be much lower than the 845 tonnes imported in 2012-13.
Substantial gains could accrue on the macro-economic front in the coming months on this count, Arvind Mayaram, Economic Affairs Secretary, told reporters here.
Against imports of 335 tonnes in April-June this year, the yellow metal imports in the subsequent quarter are estimated to have slumped to about 60 tonnes, largely due to Government measures, such as hike in import duty to 10 per cent.
Higher taxes and tighter rules on financing imports were introduced to curtail gold demand and tackle the record deficit that weakened the rupee to an all-time low.
Mayaram also said that it was gold imports that drove the current account deficit (CAD) to $ 21.8 billion in April-June this year. Gold imports stood at $ 16.5 billion in April-June this year.
It is not in our national interest to continue to import gold, he said. “CAD would have been lower at $ 14.5 billion excluding the higher level of gold imports,” Mayaram added.
The Finance Ministry is confident that CAD will be contained at $70 billion this fiscal. “We will fully and safely finance this CAD of $70 billion without any recourse to draw-down of reserves this year,” Mayaram said.
For the time being, the Ministry has decided to stick to its earlier forecast of CAD being around $ 70 billion. This is even as many analysts and brokerage houses have further pegged it down to 3.2 per cent of GDP, against 3.7 per cent estimated by the Government. The Government is betting big on foreign inflows to safely finance the CAD.
Mayaram said he expected economic growth in second quarter to be higher than the first.