India imported 50% more gold (USD 60 billion) in FY 2011-12 than last year (USD 40 billion) ! which also ultimately contributed in current account deficits which was at 30 year high (4.2% of GDP in 2011-12).

IMP/20120813

Aug-2012

Source : The financial express


India's huge gold imports in the last financial year at USD 60 billion was partially responsible to high current account deficit, Prime Minister's Economic Advisory Council Chairman C Rangarajan has said.

According to Rangarajan, India saw USD 60 billion worth of gold imports last year and the situation partly contributed to high CAD levels.

"Gold imports in the previous year (2010-11) was USD 40 billion. The increase of USD 20 billion is partly attributable to high level of inflation. If you exclude that USD 20 billion, which I considered to be an excess, then the current account deficit would have come to moderate levels (last year)," Rangarajan said.

He was delivering a lecture on the 'Indian Economy: The Way Ahead' at Hyderabad Management Association Foundation Day Lecture here yesterday.

The current account deficit (CAD) was at 30-year record high of 4.2 per cent of the GDP in 2011-12. 

CAD occurs when country's total imports and transfers are higher than its total exports and transfers. High levels of CAD leads to a slew of problems, including deterioration in the currency, to the economy.

According to World Gold Council, gold demand in India was down in the first three months of 2012-13.

Gold imports were impacted by a number of factors such as new tax on gold jewellery, increases in the import duty for gold and weakness and volatility in the rupee.