New Delhi: An out-of-the-box idea to help contain the widening current account deficit is monetising 500 tonnes of gold at the current value, Commerce and Industry Minister Anand Sharma said on Tuesday. “It is for the banking secretary, bankers and the RBI to see how you can monetise gold. The country has over 31,000 tonnes of declared gold. That is the declared part. So even if 500 tonnes is monetised, then at today’s value, I think it takes care of CAD,” he said at a meeting of the Board of Trade.
He, however, added that this “decision (of monetising gold) is beyond me… but I am just pointing in that direction. Can we do something there? I think we can, because you have to think out of the box.”
At current market rates, 500 tonnes of gold is valued at about USD 25 billion. Globally, demand for gold in April-June was 856 tonnes, down 12 per cent from a year earlier, the World Gold Council said in a statement on August 15. The government has targeted a CAD of 3.7 per cent of GDP, or USD 70 billion, in the current financial year. India’s CAD, which indicates the excess of imports of goods, services and transfers over exports, touched a record 4.8 per cent of GDP, or USD 88.2 billion, in 2012-13. The CAD has widened due to increasing imports, especially of commodities such as oil and gold. Gold imports in April-July rose 87 per cent to 383 tonnes. After a dip in June, gold imports again surged in July with 47 tonnes of inward shipments compared with 31 tonnes in the previous month. The government and the RBI have taken steps to curb demand for the yellow metal. The government recently raised customs duty on gold to 10 per cent.