India officially imported around 655 tonnes of the yellow metal during the first 11 months of 2013. The demand for gold was at 975 tonnes. So how is the difference between supply and demand being met?
"The lower CAD was primarily on account of a decline in the trade deficit as merchandise exports picked up and imports moderated, particularly gold imports," the Reserve Bank said while releasing the external sector data.
Faced with intense pressure to relax gold import curbs, the government today said it will review the decision after getting final figures of the current account deficit (CAD)
Finance Minister P Chidambaram admitted on Monday that gold smuggling has increased in the wake of higher duties and other curbs on the import of the yellow metal into the country.
The RBI said the turnaround in export growth and decline in imports from July 2013 onwards led to a sharp improvement in the trade deficit to $83.8 billion in the first half of 2013-14.
Gold is the second-biggest item on India's import bill after oil and, facing a record trade deficit and a plunging currency this year, the government imposed stringent rules with the aim of curbing demand for the metal.
The general consensus is CAD will get better in the coming days, but that needs to be achieved by boosting manufacturing and garnering a larger slice of the export market.
The government today increased the import duty on gold and silver jewellery to 15 percent from 10 percent to protect the domestic industry, although it would make ornaments more expensive for consumers.
Much of the demand was met by stocks that had been built up to healthy levels following the April price drop.
India's demand reached 566 tonnes in the first half of the year, a 50 percent jump but still lower than China's 600 tonnes, the industry-funded WGC said in its report.
Seeking to reduce the import of gold, the Reserve Bank today prohibited inward shipment of gold coins, medallions and dores without licence.
What do we do about the rupee? This is a question that is nagging everyone because notwithstanding all the measures that have been invoked so far to stabilise the rupee, it just keeps slipping downwards.
Seeking to tighten gold imports in the face of a widening CAD, the Reserve Bank set stringent conditions for importers, linking inward shipments to future exports, a decision that will make it costlier.
India is committed to bringing its current account deficit under control and reducing demand for gold and petroleum products, he said at a conference on New Delhi.
If Chidambaram really believes that gold is no different from copper or glass, why not ask the RBI to sell its gold and buy copper instead?