Ban on gold imports will cause increase in smuggling of the metal: Rangarajan

Ban on gold imports will cause increase in smuggling of the metal: RangarajanAny move to put a ban on gold imports will lead to an increase in the smuggling of the precious yellow metal, the Prime Minister’s Economic Advisory Council’s chairman, C. Rangarajan, has warned.

Speaking at the silver jubilee event of the Indira Gandhi Institute of Development Research on Saturday, Rangarajan said that there were strong indications that smuggling of gold had jumped during the past three months. He claimed that the revenue department officials informed him that the seizures of smuggled gold had jumped over the recent past.

Speaking on the topic, he said, “Banning gold imports is a bad idea. If we ban imports, smuggling will go up...”

He added that high rate of inflation was also responsible for pushing demand for the yellow metal to some extent. He pointed out that India imported gold worth $60 billion in the financial year of 2012, of which $15 to $20 billion was because of high inflation.

Reserve Bank of India (RBI) Governor D. Subbarao has repeatedly expressed his concerns over escalating gold imports. The central bank recently announced its decision to stop lending for gold purchases.

RBI Deputy Governor Subir Gokarn last week suggested that India’s gold imports would hit two per cent of the country’s gross domestic product in the next few years. So, consumers should be provided with alternative offers with “gold-like” characteristics.