A day after the government said it will take action against people who relaxed gold import norms for private trading houses during the fag end of the UPA regime, former Reserve Bank Governor Raghuram Rajan broke his silence.
Rajan said the scheme was brought in to combat the lack of gold supply and bring back jobs in the Indian jewellery sector in what is seen as a rebuttal to the government's stand that the move resulted in a windfall of Rs 4,500 crore to 13 private trading houses in just six months.
Rajan told CNBC-TV 18 that the government in 2014 was looking to relax import restrictions on gold. "The central bank then implemented the 80:20 scheme to allow importers of gold to start importing again but with certain conditions in place."
A government statement on Monday said from May 21, 2014, the Premier Trading Houses and Star Trading Houses were also allowed to import gold under 80:20 scheme, referring to former Finance Minister P Chidambaram's decision to allow even private traders to import under the scheme.
The then Finance Minister approved the modified scheme on May 13, 2014, even though the model code of conduct was in place since March 5, 2014 with the announcement of the Lok Sabha polls, and the counting was due on May 16, 2014, said the official statement.
The statement referred to a CAG report that put gold imported by 13 trading houses during June 2014 to November 2014 at 282.77 tonnes, which means a windfall gain of about Rs 4,500 crore to these agencies during the period, assuming a premium of Rs 2 lakh per kg and 80% of imported gold supplied to domestic market earning the premium. The Modi government scrapped the scheme in November 2014.