Gold imports hugely rise in March this yr

 Posing renewed challenge for the government, India’s gold imports rose once again in March to $4.98 billion from just $1.98 billion in February.

Indian’s penchant for gold is directly related to depletion in the foreign exchange reserves as the payment for the country’s import of yellow metal has to be done in dollars.

It, therefore, affects India’s current account deficit (CAD) significantly. Higher gold imports led to the unprecedented 30-year-high current account deficit of 4.7 per cent of GDP in fiscal 2013. It was only after the UPA government hiked gold import duty to 10 per cent and imposed several other measures that the imports came down in the following year and CAD reduced to a historic low.

Concerned with the rise once again, Finance Minister Arun Jaitley in his Budget speech this year proposed sovereign gold bonds and monetisation of the existing domestic gold stocks estimated at over 20,000 tonne to reduce gold imports.

India is the largest consumer of gold and with Akshaya Tritiya festival around the corner, imports were only to rise this month. Akshaya Tritiya, which falls on April 21, is considered an auspicious day by Hindus to buy gold.