New Delhi: The government is reviewing the regulatory policies related to gold, a senior finance ministry official said Monday.
Joint Secretary in Department of Economic Affairs Saurabh Garg shared the government's point of view and "mentioned that working group has been formed to review the current regulatory policies related to gold".
Garg, according to a release, made these comments while speaking at 'Senior Economists Roundtable' jointly organised by India Gold Policy Centre (IGPC) and National Institute of Public Finance and Policy (NIPFP).
Arvind Sahay, Head IGPC, IIM-Ahmedabad said that increase in customs duty to 10 percent is an issue.
"Not only has the increase in prices likely been a factor in reduction in consumer demand, but it has probably also caused a great deal of smuggling of gold into the country," he said.
Apart from the senior economists, the domestic gold sector stakeholders including bullion banks, import agencies, refiners, manufacturers of jewellery and bars, and wholesalers of jewellery participated in the seminar.
The release further said that the Gold Industry "seems to be a by-stander" watching the festival buying season end.
The weak consumer demand appears to have been caused by a multitude of factors such as higher imports duty, entry tax, octroi, excise duty and sales tax (VAT), overall general economic slowdown.
Stakeholders, the release added, have been urging the government to address the issues on an urgent basis, through deliberations.
The stakeholders would also be submitting a joint whitepaper to government.
Rathin Roy, Director, NIPFP observed that gold in India has been historically not just a store of value and a medium of exchange but also an investment in itself.
"For this reason, the treatment of gold as a resource requires unorthodox thinking and careful treatment. India 's gold policy is an integral part of our macroeconomic and fiscal toolbox," he said.
The release further said that if the GST is levied at 4 to 6 percent and Customs Duty at 10 percent, the consumer will need to pay taxes to the extent of 14 to 16 percent on the purchase of gold.
"If indeed prices remain at 10 percent or more on the upside, this would likely affect the final price of gold to the consumer, and then this could have a further cascading impact on the industry and consumer behavior and needs policy attention. It would also lead to greater smuggling of gold," it said.