Chidambaram favours continuation of curbs on gold imports

Notwithstanding the likelihood of the current account deficit (CAD) narrowing to less than $50 billion, Finance Minister P Chidambaram today made a case for continuing some kind of restriction on gold imports.

"I think there should be some restraint on gold imports. We should also attempt to discover more gold in our own country," he said in an interview to CNBC-TV18.

Referring to a recent Supreme Court judgement on auction of all closed mines, he said the Mines Ministry should sell "the so-called closed mines because there are persons around the world who have met me and said, 'Give us the mines and we would be able to extract gold.'"

He said, "As a proposition, restraining gold imports is a correct move."

However, some experts, including RBI Governor Raghuram Rajan, have favoured doing away with curbs on gold imports because they lead to smuggling.

Both the government and the RBI had imposed several restrictions on gold imports to check the widening CAD, which according to Chidambaram, "will be lower than $50 billion" this financial year.

The CAD touched an all-time high of $88.2 billion, or 4.8% of GDP, in 2012-13 because of various factors, including rising gold imports.

The minister also reiterated the government's commitment to restrict the fiscal deficit to 4.8% of GDP in the year ending March 2014.