India to review gold curbs by end-March: Chidambaram

New Delhi: India will review its curbs on gold imports towards the end of this fiscal, but the limits can be relaxed only when the current account deficit is firmly in control, finance minister P. Chidambaram said on Monday.

The ruling Congress party’s president Sonia Gandhi had urged the government to do away with restrictions on gold imports.

Addressing customs officials on international customs day, Chidambaram said gold smuggling in India is estimated at around 3 tonnes a month. Officials pointed out that these are only the detected cases and the actual amount of smuggling could be substantially higher.

Gold imports had crossed 300 tonnes in the first two months of this fiscal, threatening to spiral India’s current account deficit out of control. To counter this, in a series of hikes last year, the government raised the import duty on gold to 10%.

“In the long term, policy repression is not the solution. We have to look at a way to increase our exports and earn foreign currency to pay for our imports. We will relax the curbs only when we are absolutely sure that we have a firm grip on the current account deficit and the balance of payments situation,” the finance minister said in his speech.

He also hinted that indirect tax collections may fall short of the budgeted target of ₹ 5.65 trillion. The government has lowered its budget estimate of custom duty collections, he added.

The finance ministry is currently in the process of calculating the revised estimates for the vote on account, likely to be scheduled for 17 February.

A finance ministry official said that achieving an almost 20% growth in revenue collections when the economy is growing at only 5% is not possible. “We are awaiting the tax collection figures as of 31 January. We will get a better picture then. We should be able to at least have a 10% growth over the previous year’s tax collections,” he said.