Never advocated selling, pledging of gold stocks: Anand Sharma

Commerce Minister Anand Sharma clarified that he only wanted the Reserve Bank to look at the possibility of 'monetising' gold reserves to check CAD.

Last Updated: Aug 29, 2013, 19:31 PM IST

New Delhi: Commerce Minister Anand Sharma Thursday said he never advocated selling or pledging country's gold stock to tide over forex problems, clarifying that he only wanted the Reserve Bank to look at the possibility of 'monetising' gold reserves to check CAD.

"I have not said that there should be any mortgaging of the gold, or, auction of the gold. That is incorrect; and I deny it. What I said was that the RBI should look into it how they can benefit the people, particularly with regard to bonds, or, the monetisation. I also said that it was beyond my jurisdiction," he said in the Rajya Sabha.

The response came after BSP leader Satish Chandra Mishra raised the issue of Sharma's reported statement outside Parliament earlier in the week on using gold reserves by RBI to control the Current Account Deficit.

"This was a suggestion made by many economists, and it was for the RBI to consider the dimension and whether it would bring down the import of gold into the country for which there is an outgo of foreign exchange," Sharma said.

However, the minister did not elaborate on what he meant by monetising of the gold reserves.

"So, I am clarifying before this House that it is not the correct understanding. I have not said that there should be any auction or mortgaging of gold," he added.

The Commerce Minister on Tuesday said: "It is for the banking secretary, bankers and the RBI to see how you can monetise gold, (from) the country with over 31,000 tonnes of declared gold. That is the declared part. So, even if 500 tonnes is monetised, then in today's value, I think it takes care of CAD."

Sharma had said that this "decision (of monetising gold) is beyond me... But I am just pointing in that direction. Can we do something there? I think we can, because you have to think out of the box".

At current market rates, 500 tonne gold is valued at about USD 25 billion. Globally, demand for gold in April-June was 856 tonne, down 12 percent from a year earlier, the World Gold Council had said in a statement on August 15.

The government has targeted a CAD at 3.7 percent of GDP, or USD 70 billion, in the current financial year. India's CAD, which indicates the excess of imports of goods, services and transfers over exports, touched a record 4.8 percent of GDP, or USD 88.2 billion, in 2012-13.

The CAD has widened due to increasing imports, especially of commodities such as oil and gold.

Gold imports in April-July rose 87 percent to 383 tonne. After a dip in June, gold imports again surged in July with 47 tonnes of inward shipments compared with 31 tonnes in the previous month.

The government and the RBI have taken steps to curb demand for the yellow metal. The government recently raised customs duty on gold to 10 percent.