Finance minister P Chidambaram said India cannot afford high levels of gold imports. He said there could be more restrictions imposed on gold imports as part of measures to rein in current account deficit that is causing the rupee to depreciate at an alarming rate. He said in New Delhi yesterday that the seventh meeting of the Financial Stability and Development Council has discussed the issue. India imported 162 tonnes of gold in April, raising concerns that the current account deficit that touched a record high of 6.7 per cent of GDP in October-December 2012 quarter may not fall much in the new fiscal.
The high current account deficit has also reduced the room for the Reserve Bank of India to cut rates to prop up the economy.
Department of Economic Affairs Secretary, Arvind Mayaram said, there should be a ban on the sale of gold coins by banks and action has to be taken to reduce gold imports.
The Financial Stability and Development Council also reviewed the asset quality and capital adequacy of the banking system in the country, the ministry said in a statement.