Worried over widening current account deficit (CAD), the Government indicated it could take more steps to check gold imports.
“Some more steps, if necessary, would have to be taken, but I appeal to the people of India to contain their passion for gold,” Finance Minister P. Chidambaram told newspersons here.
Gold imports jumped 138 per cent to $7.5 billion last month, the highest so far this year, pushing up the trade deficit to $17.7 billion.
“We anticipated that the gold import will increase. April and May all over India are months when there is largest number of weddings. So, we were not surprised that gold imports increased in the second half of April,” he said.
“The passion for gold is causing imports and it is leaving a big hole in the current account deficit,” Chidambaram said.
The CAD has widened on account of increased gold imports, which rose to 1,017 tonnes in 2012-13 from 471 tonnes in 2000-01. Gold imports last year accounted for 72 per cent of CAD — the difference between outflow and inflow of foreign currency.
Rating upgrade
Reacting to S&P’s warning of a downgrade, Chidambaram said India deserves an upgrade in view of the improvement in the macroeconomic situation. “Our case is that we deserve an upgrade both on the outlook and the rating. S&P may not have been convinced about that...”
“There is nothing to worry. Our macroeconomic position today is much better than what it was in August 2012,” Chidambaram said, adding that the economy was entering a new phase of strong growth.