India, the world’s largest bullion consumer, plans to review import policy after shipments surged in the past two months, threatening to widen a record current-account deficit.
The country can’t afford high levels of imports and policies will be reassessed if needed to curb purchases, Finance Minister Palaniappan Chidambaram told reporters in New Delhi today. He didn’t specify what changes could be made. Imports may have been as high as 262 metric tons in May, he said.
India tripled tax on imports since January last year to 6 percent and placed curbs on purchases by banks after bullion slumped the most in three decades in April, sparking a buying frenzy for jewelry, coins and bars. The Reserve Bank of India may ban all importers from shipping the metal on a consignment basis, a finance ministry official told reporters in New Delhi today, asking not to be identified citing government rules.
Gold and silver imports more than doubled to $7.5 billion in April, according to the Commerce Ministry. Chidambaram’s estimate of shipments for May seemed too high, Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation, said by phone from New Delhi.
The current-account deficit, the broadest measure of trade, widened to an all-time high of $32.6 billion in the last quarter of 2012, according to the central bank.
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