Import curbs to rein deficit

Import curbs to rein deficit

After raising customs duty on gold, the government said it may restrict import of certain commodities if current account deficit (CAD) crosses 3.5 per cent of the Gross Domestic Product.

“Curtail Current Account Deficit to the extent feasible because otherwise India may face problems in the years to come. If we cross Current Account Deficit of 3.5 per cent, we need to see which are the imports which can be curbed without adversely impacting growth,” Finance Secretary R S Gujral said.

CAD which includes deficit in external trade of goods, services besides net investment income stood at 2.9 per cent of GDP last fiscal.

For the current fiscal CAD as a proportion of GDP expected  to be around 3.6 per cent for 2011-12.
“Straightaway, the one which we saw was gold. Roughly about US$60 billion worth of gold import has already taken place in 11 months of 2011-12,” he said.

The basic idea is to restrict the import of the gold, he said, adding, the savings from them is directed towards financial savings and the real sector rather than being caught up in unproductive gold assets.
On disinvestment, Gujral said the government expects to mobilise Rs 30,000 crore in 2012-13 from sale of shares of public sector companies.

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