Relaxing gold import curbs: Chidambaram defies Sonia?

After LPG subsidy, gold import curbs are hogging the limelight. And there is no surprise, considering this is an election year.

Soon after CNBC-Awaaz TV channel reported, citing sources, that Congress President Sonia Gandhi has written a letter to the government seeking relaxation on gold import curbs, Finance Minister Chidamabaram said that no such move is possible until the country’s current account deficit comes under control.

“I haven’t seen the letter. We do not contemplate any roll back of gold import curbs until we have a firm grip on current account deficit. The situation will be known only when the Budget is presented,” he told CNBC-TV18 from Davos.

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The government will present its budget on 17 February.

Earlier, CNBC-Awaaz had reported that Gandhi had written to the government asking it to lower the import duty on gold and also relaxing the 80:20 scheme.

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The government had last year taken various steps to control the imports of gold which it said was resulting in a alarming current account deficit situation that prompted foreign institutional investors to exit Indian equities and bonds.

Notably, the government increased the import duty on gold to 10 percent in phases from 4 percent earlier. It also made re-export of 20 percent of all gold imports mandatory, which is called the 80:20 rule.