House panel slams UPA govt over 20:80 gold scheme

NEW DELHI, DHNS: A parliamentary panel headed by a Bharatiya Janata Party MP has lambasted the previous UPA government over the 20:80 gold scheme announced in 2013, which was found to have been exploited by fugitive jewellers Nirav Modi and Mehul Choksi.

The duo are now facing probe for fraudulent transactions of over Rs 13,000 crore from Punjab National Bank.

The panel has also recommended an investigation into any "possible links" between functionaries of the finance ministry (then headed by P Chidambaram) and beneficiary individuals and firms that imported gold jewellery during the operation of this particular scheme.

The Public Accounts Committee's sub-committee on direct and indirect taxes, headed by BJP's Nishikant Dubey, submitted a report on April 2 to the main committee headed by senior Congress leader Mallikarjun Kharge. The sub-committee was examining a CAG report of 2016 that flagged how the scheme had caused loss of around Rs 1.3 lakh crore to the exchequer.

Pointing out the anomaly in the guidelines issued by the RBI under the scheme, it concluded the modifications in the 20:80 scheme, which "derailed" the restrictions on import of gold, for reducing the current account deficit (CAD), was notified by the RBI on the advice and initiation of the finance ministry and not in its (RBI's) own wisdom.

The sub-committee also recommended that all suspicious transactions between importers and exporters during the operation of the 20:80 scheme and the reasons for "inaction by the DRI and CVC" may be investigated by the CBI.

The PAC has often seen the Congress-BJP divide, which at times flared up to an extent that some reports either could not be adopted or have to be modified after vociferous protests from either of the side.

The sub-committee concluded that while the RBI circular dated August 14, 2013, allowed gold in any form/purity to be imported, the fact remains that the 20:80 scheme was aimed at promoting the export of gold jewellery to stimulate domestic economic activity through its manufacturing and improve the country's CAD.

The panel is learnt to have reasoned in its report that as such the (finance) ministry's justification for allowing import of gold jewellery by saying that the RBI circular did not specifically bar import of gold jewellery "smacks of feigned ignorance" about the whole purpose of the 20:80 scheme.

It said that the panel feels that the ministry rather than act in tandem with the spirit of the 20:80 scheme feigned ignorance and "gave in" to the vested interests keen on making huge profits from loopholes in the scheme.

The sub-committee's recommendations have come at a time when the Congress has launched a massive campaign against the Narendra Modi government on the issue and the case is under investigation.

After the PNB scam came to light, the BJP has repeatedly attacked the Congress for the UPA government's decision to lift several restrictions on gold imports on May 16, 2014, the day results of the 2014 Lok Sabha elections were declared. In November the same year, the NDA government scrapped the controversial 80:20 scheme.