New Delhi: Love for gold among Indians is the major reason for mounting current account deficit (CAD), Minister of State for Planning Rajiv Shukla said Wednesday and made a strong pitch for urgent steps to curb the rising import of the precious metal.
Of the USD 71 billion CAD, as much as USD 51 billion is on account of gold imports, he said. The time has come for strong steps to curb gold imports, he added.
He also expressed the hope that Finance Minister P Chidmabaram will look into this aspect.
The Finance Minister had already expressed concerns over rising imports of the precious metal and hinted at hiking duty on gold imports to curb demand.
The basic customs duty on standard gold bars is 4 percent and the levy on non-standard gold is 10 percent.
Outflow of the foreign exchange on account of gold imports is impacting the country's CAD-- which represents the difference between exports and imports after considering cash remittances and payment.
CAD has widened to USD 38.7 billion or 4.6 percent of the GDP -- an all-time high figure-- during the first half of the current fiscal.
Finance Ministry officials say rising gold import in the past two months is a cause of concern and the government could announce a import duty hike in the Budget.
Chidambaram will present the Union Budget in Parliament on February 28.
"A decision has to be taken to arrest the declining forex reserves," Shukla said, adding that Opposition should positively contribute to this direction so that economy could be made stronger.
Shukla said in fact the government was forced to bring in FDI in retail to generate around USD 30 billion to help rein in the rising CAD.
"The agenda of economic reforms has to be carried out in order to bring more foreign exchange to improve economic conditions," Shukla said.
Parliament had rejected the Opposition motions against FDI in retail.