Liberalising Gold Policy Vital For Achieving Success

The Tarapore committee has said that liberalising the overall policy regime on gold is vital to the success of capital account convertibility. There is a strong case for liberalising the gold regime, it said. The committee has also recommended the entry of Indian entities into the international commodities markets.

The committee felt that a restricted import regime on gold provides an added incentive for the parallel economy.

However, the committee noted that the large imports of gold in recent years have not put any pressure on the countrys balance of payment or the exchange rate of the rupee. It may be just a return flight of capital to the country, the committee observed.

 

At present, the report says, gold can be imported only in three ways: through cannalising agencies, special import licences and by NRIs.

The report has suggested doing away with the restrictions in three phases.

In the first phase, participation in international commodity market will be allowed.

Moreover, banks and FIs fulfilling defined criteria will be permitted to operate freely both in domestic and international markets. These institutions can sell gold to residents, offer gold denominated deposits and loans.