Tuesday, 12th July 2005 (4152 views)

India has authorised a further liberalisation of the rules regarding gold imports.

The government has authorised more entities to import in addition to the current list of some 17 agencies that include trading houses and banks.

The Indian ministry of finance is seeking to justify the decision on the basis that it would ensure adequate supply in the market for the benefit of consumers.

During 2004-05 India imported 770 tonnes of gold, up from 450 tonnes in the early 2000s.

Liberalising gold imports will, in theory, lead to substantial resource outflows and would help jewellery makers and others to access the yellow metal freely without having to go through intermediaries.

Many commentators in the country have argued for a free-trade regime in commodities and unrestricted gold imports-provided there is optimal resource allocation.

However, gold in India is used mainly used for hoarding, or for the production of household ornaments.

 

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