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Citing prevailing favourable factors boosting the country's overall trade performance, the Economic Survey today said it is an "opportune time" to remove restrictions on gold imports.
The robust external-sector outcome in the current year of moderate trade and current account deficits, abundant financial flows, a build-up of foreign exchange reserves and broadly stable exchange rate movement points to a return to the path of strength and resilience that was in evidence before the global financial crisis of 2008, it said.
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"The overall trade performance signaled an opportune time for withdrawal of restrictions on gold imports," said the Survey for 2014-15, tabled in Parliament.
In 2013-14, India's trade deficit declined to $135.8 billion from a high level of $190.3 billion in 2012-13, mainly on account of a decline in the growth of imports even though growth in exports was sluggish at 4.7%, it said.
The decline in imports was attributed to lower growth in oil imports (0.4%) and negative growth in gold and silver imports.
The survey said financial inflows in excess of the requirements have helped shore up foreign exchange reserves ($328.7 billion at the end of January 2015). They have helped lessen the vulnerability concern that led to serious stress last year.
In order to check the rising CAD, the government had raised import duty on gold to 10%, while RBI imposed curbs on import of gold and also laid down various pre- conditions for inward shipments of the precious metal.
The restrictions on gold imports led to a rise in cases of smuggling which went up in 2013-14 to 2,441. In 2012-13 and 2011-12, the number of such cases stood at 869 and 500 respectively.
In November, easing restrictions on gold imports, Reserve Bank scrapped the controversial 80:20 scheme, according to which at least 20% gold imported had to be mandatorily exported before bringing in new lots.
Current Account Deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of $88 billion or 4.7% of GDP in 2012-13, mainly due to high imports of gold and petroleum products.
Gems and jewellery exports contribute about 15% to the country's total outbound shipments. In 2013-14, the exports were to the tune of $39.5 billion as against total exports of about $312 billion during the fiscal.
CAD came down to $32.4 billion or 1.7% of GDP in 2013-14.