Bonds, Currencies & Commodities
Government considering steps to contain gold import: Chidambaram

The Finance Minister said the union government may be left with no choice but to make it a little more expensive to import gold as it is affecting foreign exchange reserves


New Delhi: Concerned over rising gold import and widening current account deficit (CAD), Finance Minister P Chidambaram on Wednesday said union government is considering steps to make import of the precious metal more expensive, reports PTI.


"Demand for gold must be moderated... We may be left with no choice but to make it a little more expensive to import gold. The matter is under government consideration," he told reporters.


The CAD, which represents the difference between exports and imports after considering cash remittances and payment, has widened to $38.7 billion or 4.6% of the GDP during the first half of the current fiscal, he said.


This was mainly contributed by gold imports which amounted to $20.25 billion.


Had the gold imports been half of the actual level, Chidambaram said, "our foreign exchange reserves would have increased by $10.5 billion" as against the marginal accretion of $0.4 billion during April-September.


The country, the Minister said, "cannot afford to spend so much on importing gold. Nobody says gold within the country should not be used for whatever purpose. There is enough gold within the country. But import of gold is huge strain on the current account".


During 2011-12, gold imports stood at $56.2 billion.


On reports of smuggling of gold, Chidambaram said, it is mostly speculative. "May be some smuggling has taken place but whatever level of duty, there is always smuggling."


In order to curb demand of gold, the then Finance Minister Pranab Mukherjee in his Budget last year had doubled the basic customs duty on standard gold bars to 4% and on non-standard gold to 10%.


There has been moderation of gold imports as a result of government policies during the first half of the current fiscal.


In value terms, gold imports at $20.2 billion in the April-September reflects a decline of 30.3% over the corresponding period a year ago.


The decline can partly be attributed to increase in customs duty on gold imports by government in January and March 2012.


As more is needed to be done, Chidambaram appealed to the people "moderate the demand for gold which leads to its large imports".


Traditionally, India has been the world's largest consumer and importer of gold. The price of gold in the national capital yesterday rose by Rs155 to Rs31,145 per 10 gm, while silver became expensive by Rs740 to Rs57,740 per kg.


The main contributors to the widening CAD, Chidambaram said, were declining exports which slipped by 7.4% during the first half of the current financial year and rising imports which went up by 4.3% in the same period.


The gap in export and import, he added, was partly made up "by an increase in services exports of 4.2% and, consequently, surplus in services which amounted to $29.6 billion and remittances of $32.9 billion".


The CAD, the Minister said, was financed without drawing on country's foreign exchange reserves, mainly because of adequate inflows of FDI ($12.8 billion) and FII ($1.7 billion).


The net result, Chidambaram said, is that "we have not drawn on the foreign exchange reserves and, in fact, there is a marginal accretion of $0.4 billion to the reserves."


Gujarat says will implement SC judgement on Lokayukta

In a setback to the Gujarat government, the Supreme Court upheld appointment of RA Mehta as the state Lokayukta, saying it was done in consultation with the Chief Justice of Gujarat High Court


Gandhinagar: With the Supreme Court on Wednesday upholding Governor Kamla Beniwal's decision to appoint Justice (retd) RA Mehta as Gujarat Lokayukta, the Narendra Modi government said it would soon implement the apex court judgement, reports PTI.


"We will soon implement the Supreme Court judgement on Lokayukta," state Law Minister Bhupindersinh Chudasama said.


"The Supreme Court has accepted Gujarat government's contention that Governor has to act as per the advice of the Council of Ministers," he added.


A detailed reaction on the issue could only be given after reading the judgement, Chudasama said.


In a setback to the Gujarat government, the Supreme Court upheld Mehta's appointment as the state Lokayukta, saying it was done in consultation with the Chief Justice of Gujarat High Court.


The Governor was bound to act under advice of Council of Ministers, but in this case the appointment was not wrong since it was done in consultation with the High Court Chief Justice, the apex court said.


Governor Kamla Beniwal had on 25th August last year appointed Justice Mehta to the post of Lokayukta, which had been lying vacant for the last eight years.


Adopting a cautious approach, Bharatiya Janata Party (BJP) state spokesperson Vijay Rupani said, "Let us get a copy of the Supreme Court verdict. We will study it and then comment."


The Opposition Congress and NGOs in Gujarat welcomed the Supreme Court's decision on Lokayukta, saying it will expose the state government's "corrupt" practices.


Former Congress Legislature Party (CLP) leader Shaktisinh Gohil said, "We welcome the decision. The Governor's decision to appoint Lokayukta was legal and within her constitutional rights...Better late than never..."


"The BJP, at the national level, wants Lokpal and stalls Parliament proceedings demanding setting up of a Lokpal. The law was in place but Lokayukta was not appointed for the last eight years. The state government used delaying tactics by challenging Governor's decision in the High Court and when the Gujarat HC ruled in Governor's favour, they went to the apex court," Gohil said.


"The common man of Gujarat can now know the corrupt practices of the state government and the Lokayukta provides them a platform to raise voice," Gohil, the former leader of opposition in Gujarat Assembly, said.


Social activists and advocates also welcomed the apex court's decision.


"This judgement is not only important for Gujarat but for all states because the Supreme Court has decided whose opinion should matter in the appointment of Lokayukta, of Chief Justice of the Gujarat High Court or Chief Minister," advocate Mukul Sinha, who had filed a petition in the court for the appointment of Lokayukta, said.


"Modi government was insisting that the opinion of CM as the head of council of ministers should have the primacy. As SC has decided the issue now, Gujarat can have neutral, unbiased Lokayukta," Sinha further said.


Reacting to the verdict, social activist Teesta Setalvad said, "It is a victory of constitutional governance and the rule of law over the arrogance of power. No one is above law."


Father Cedric Prakash, director of NGO Prashant, said, "The Supreme Court judgement must be seen as a shot in the arm for constitutional propriety and a serious effort in ensuring that justice and truth ultimately find a place in Gujarat".


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