Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The doubling of customs duty to 4% on gold is unlikely to curb demand and consequently imports, which have aggravated the current account deficit. According to Madan Sabnavis, chief economist, CARE Ratings, domestic households traditionally consume gold to meet wedding season and festival demand and so a 2% hike in customs duty is unlikely to deter imports.
But, if gold imports increase, the government would gain by higher revenues and if imports do drop because of the higher duty it would reduce downside pressure on the rupee, a win-win for the government on both counts, pointed out Sabnavis.
"Also, people tend to invest in alternate asset classes such as gold, when equities and real interest rates are under pressure,"" added Sabnavis. Finance minister Pranab Mukherjee said, ""One of the primary drivers of the current account deficit has been the growth of almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results."
"I propose to increase basic customs duty on standard gold bars; gold coins of purity exceeding 99.5 per cent and platinum from 2 per cent to 4 per cent and on non-standard gold from 5 per cent to 10 per cent. In sync with these, basic duty on gold ore, concentrate and dore bars for refining is being enhanced from 1 per cent to 2 per cent. On the excise side, duty on refined gold is being increased in the same proportion from 1.5 per cent to 3 per cent.
Rajesh Mehta, chairman, Rajesh Exports, said higher duty would not impact demand as people normally buy an asset whose price is on the rise rather than one which is falling.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The doubling of customs duty to 4% on gold is unlikely to curb demand and consequently imports, which have aggravated the current account deficit. According to Madan Sabnavis, chief economist, CARE Ratings, domestic households traditionally consume gold to meet wedding season and festival demand and so a 2% hike in customs duty is unlikely to deter imports.
But, if gold imports increase, the government would gain by higher revenues and if imports do drop because of the higher duty it would reduce downside pressure on the rupee, a win-win for the government on both counts, pointed out Sabnavis.
"Also, people tend to invest in alternate asset classes such as gold, when equities and real interest rates are under pressure,"" added Sabnavis. Finance minister Pranab Mukherjee said, ""One of the primary drivers of the current account deficit has been the growth of almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results."
"I propose to increase basic customs duty on standard gold bars; gold coins of purity exceeding 99.5 per cent and platinum from 2 per cent to 4 per cent and on non-standard gold from 5 per cent to 10 per cent. In sync with these, basic duty on gold ore, concentrate and dore bars for refining is being enhanced from 1 per cent to 2 per cent. On the excise side, duty on refined gold is being increased in the same proportion from 1.5 per cent to 3 per cent.
Rajesh Mehta, chairman, Rajesh Exports, said higher duty would not impact demand as people normally buy an asset whose price is on the rise rather than one which is falling.
No comments:
Post a Comment