Bullion bonanza! FM rules out further duty hikes on gold imports

Finance minister P Chidambaram on Thursday appealed to people to stop buying gold again.

The minister last week had said that the increasing gold imports are unsustainable and advised the banks to tell customers not to invest in the yellow metal.

He ruled out any further customs duty hikes on gold imports, saying: "I don't want to become too unpopular." The government, which has to face the electorate in the general elections next year, would not want to antagonise citizens on a strong emotionally-linked investment.

He went on add that economic indicators like the current account deficit will improve drastically if Indians do not import gold for a year.

Chidambaram had suggested all banks that they should not encourage their customers to invest in gold.

He was speaking at a press conference to highlight the measures being taken by the government to get the economy on track.

According to Chidambaram, if the country has minimal gold for six months or one year, it will drastically change the situation in the current account deficit (CAD). The positive impact of an improved CAD will be seen on stock market, exchange rate and interest rates.

The government has taken a number of measures to discourage people from buying gold.

The government increased the import duty on gold from 4% to 6% in January followed by a more recent hike in June taking the import duty to 8%.

Chidambaram also recommended people to buy inflation-indexed bonds as an alternative to gold investment.

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