........ On interest rate increases and tightening of liquidity, India Inc. has been forcefully lobbying for easing of monetary policy and it would be creditable if the RBI can resist these pressures. While earnest attempts are being made to undertake a fiscal correction, political economy considerations appear to thwart effective action.........
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There is need to bring down gold import, viewed from the need to reduce current account deficit. This can be achieved if there is a political will and a proper understanding of the basic reasons for ‘hoarding’ of gold. There is no alternative to putting domestic stock of gold to productive use. There is no perceivable effort from the government’s side to discourage further accumulation of ‘ornament gold’ in households which is partly responsible for financial loss to middle class families in India and to some extent, dowry-related issues and security problems.
Import and accumulation of huge quantities of gold in the form of jewellery have other social implications like under-utilisation of financial resources for productive uses and pledging of assets for raising funds which ultimately helps only the money lender in whatever attire he surfaces. In the absence of a system to check purity easily, a likelihood of individuals/families getting perennially ‘attached’ to a particular jewellery group cannot be ruled out. This is a possibility, as jewellery shops are yet to universally accept the current hall marking arrangement when it comes to gold bought from outside.
One way to get over the present rise in import not commensurate with the export of gold products is to link the quantum of import to the previous few years’ export record. Import of gold for pharmaceutical and other essential purposes could be outside such limits.
M G Warrier,Mumbai
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