Encourage formal saving instruments more than gold: Assocham
New Delhi: The government must encourage investors to utilise other financial options to help boost the economy instead of relying on gold imports as they are unsustainable and intensify current account deficit, industry body Assocham Thursday said.
Post offices, especially in rural areas, should be used to sell such government guaranteed instruments to extend their reach throughout the country, the study titled 'India's Gold Rush -? Its Impact and Sustainability' said.
Being the largest importer of gold in the world, India accounts for nearly one-third of the annual demand. The nation imported gold worth USD 33.8 billion in 2010-11.
Gold as a commodity does not add much to the productive capacity of an economy, the study said, by adding the gold import bill could be USD 100 billion by 2015-16.
"As the government increased import and excise duties on gold and silver, both commodities are set to cost more," it said.
In January, the government had raised duty to two percent of the value on 10 grams of gold and six percent on 1 kg of silver, meaning that importers have to pay double the duty.
"...gold imports are a huge burden on the balance of payments and accentuates the current account deficit. On the other hand, it represents a massive strain on investable resources," it said.
The chamber said efforts must be made to introduce more financial saving instruments and extensive education campaigns should be undertaken - particularly in rural areas - to minimise propensity towards gold.