A Parliamentary committee has deplored the government for “fiddling with” gold imports to put a curb on rising import figures and asked it to change its orientation towards dealing with trade imbalance.
“The government has not been able to offer any out-of-the-box solution to bridge the gap between exports and imports. It has since long been fiddling with gold imports to put a curb on rising import figures,” the Parliamentary Standing Committee on Commerce has said in its report recently tabled in Parliament.
The committee also said that the Commerce Department has failed to boost export performance and narrow down country’s trade balance that has been into existence for quite sometime. India’s gold imports, which have been on a sustained rise since June last year, went up to 125 tons in March this year. India is the world’s second biggest consumer of gold and industry players expect the import of the yellow metal to be on a rising spree in the April-June quarter too with a robust demand. However, the rise in gold imports has been a problem for the governments in India which targets gold as a way to reduce the current account deficit and the resultant scare of an adverse balance of payment situation.
The government increased import duty on gold three times in 2013 to 10 per cent. The import cuts helped the government narrow the current-account deficit to about $32.4 billion in fiscal 2013-2014, compared with a record $87.8 billion the year before.
The Parliamentary standing committee has, however, suggested that the government should rather take measures to promote exports rather than putting excessive curbs on imports. The panel said that trade deficit has become a “structural feature” for India.
“The committee is of the opinion that it is imperative for the department to change its orientation to bring about desired impact on the export front,” it said. The committee also desired that the export promotion schemes be revisited to give more space to SMEs in general and “hand hold” them to access the neighbouring countries. The panel, though hailing government efforts to diversify Indian export basket through a series of measures, however, drew the attention that a growth in exports to Sri Lanka, Nepal and Bangladesh have been somewhat neutralised by contraction in shipments to Pakistan, Afghanistan and Bhutan.