Gold, a name that has shone over centuries of human civilization is glittering today even more on account of global recession. Indians have an insatiable appetite for gold. Historically, the yellow metal has underpinned the financial security of individuals, families, kingdoms and the state. So, every bit of surplus savings from the family budget goes to buy gold. Added to this is the Indian women’s fascination for gold jewellery.
India’s domestic production of gold is very limited; the rising demand has to be sourced from outside the country. Moreover, Gold as a commodity on its own does not add much to the productive capacity of the economy. When one buys gold, it either is stored in lockers or gets converted into jewellery. In both the cases, money spent on purchasing gold gets blocked since gold is not a productive asset. There are certain qualities of gold that make it a desirable investment option. Some of these being:
- The ability of gold to insure against instability and protect against risk.
- Has universal acceptance.
- Provides liquidity.
- Deep cultural affinity with gold purchase
Despite being an impoverished country with low per capita income, India tops the world in buying gold. India’s exports have been declining for the last couple of years. With surging imports, the trade deficit and, therefore, the current account deficit are rising disturbingly. A high CAD impacts the value of currency which in turn makes imports expensive and adds to the fiscal deficit. During hard times, it is imprudent to divert the country’s forex to buy gold. Gold India is the world’s single largest gold bullion consumer. India owns more than 18,000 tonnes of above-ground gold stocks worth about $800bn.
But India's fetish for gold threatens to take the shine off its fast-paced economic growth.
Many economists worry that financial markets are losing out on funds that have instead been spent on gold. South Indian region continues to be the largest consumer of gold in the country. The four southern states account for over 40% of the nation's overall gold demand.
The rate of gold in India is hovering around Rs 29,000 to Rs 30,000 per 10 gram.
Thus high gold bill is affecting the overall economy of the country.
In this background, the present term paper will try to explore the effects of ever rising gold demand on the Indian economy, especially on current account deficit and measures adopted by government to balance it.
Facts about Gold in India
Demand and Supply
Despite being an impoverished country with low per capita income, India tops the world in buying gold. India’s exports have been declining for the last couple of years. With surging imports, the trade deficit and, therefore, the current account deficit are rising disturbingly.India's $88 billion current account deficit in 2012-13 was third highest in the world, contributed largely by high imports of gold, oil and coal.
The government is counting on a the various measures announced to curb gold purchases to lower the current account deficit to $70 billion in the current fiscal, 3.7% of GDP.
- Imports are high because of the large population. Per capita gold consumption is only 0.7 grams, half that of the US and one-third of the Middle East, according to World Gold Council (WGC) estimates.
- India's gold market is estimated to have 300,000-plus jewellers, mostly small-family run businesses according to a study done by WGC.
- Only 23 banks and some private and government trading agencies have licences to import gold because of its implications for foreign exchange flows.
- Investment purchases of gold have been rising faster than jewellery purchases. WGC's latest data shows the investment to jewellery ratio is approximately at 30:70.
- In urban areas, gold faces competition from diamonds as incomes have risen but higher purchasing power of the lower and middle sections of the population has brought new customers to the market.
Every tradition in India involves give and take of gold. The fascination of gold in India is not new. Indians own 18,000 tons of gold worth a staggering $ 1 trillion at current prices, according to estimates of World Gold Council. This is a tenth of the gold held in the whole world.
Besides tradition, Indians are buying gold as an investment avenue. The Economic Survey for 2012-13 highlights that an investment in gold gave a 23.7% average annual return between April 2007 and March 2012. This is against 7.3% return on NSE Nifty and 8.2% return on savings bank deposits.
However, the love of gold is creating macro-economic concerns.
- Imports surge: India’s gold imports for 9 months to December 2012 stood at $ 37.6bn. India’s overall trade deficit (excess of import over exports) stood at $147bn. Gold accounts for over a quarter of the trade deficit. This results in current account deficit surging to a new high of 5.4%. A high current account deficit exerts pressure on the rupee as the demand for foreign exchange rises. This means people sell the rupee and buy more of the foreign currency. In 2012-13, India imported nearly 1017 tons of gold, spending a whopping USD 54 billion on import bill.Import of gold went up by a huge 87 per cent from 205 tonnes in April-July 2012 to 383 tonnes during the corresponding period 2013. In value terms, the increase was 68 per cent from Rs 56,488 crore to Rs 95,092 crore.
- Government discouraging imports: The government has increased the customs duty on gold thrice in year 2013, firstly to 6% from 4%; then to 8% from 6%, then again to 10% from 8%. Analysts expect the import duty on gold to be levied in this year’s budget. The government could look for increasing the revenue. By making gold expensive, the government could direct household savings into financial assets.
- Value of gold: In all, Indians bought 6,326 tons of gold over the past 11 years from financial year 2001-02 to 2012-13. The value of this gold has gone up to $54bn from $ 166bn in 12 years i.e. fourteen fold in just a decade, according to Kotak Securities estimates.
- Worth almost as much as shares held: The gold holding value is half of India’s near $ 2 trillion gross domestic product. It is almost near the value of Indian companies listed on stock exchanges measured by the market capitalisation at $ 1.2 trillion. India needs just a tenth of that amount or $ 100bn to boost its infrastructure and fire up growth.
- High quantity: In 2011-12, India imported 1,078 tonnes of gold. India exported 250 tonnes of gold in the form of jewellery. India’s net gold addition over the years stands at 8,435 tonnes.
- More pledging: Indians are pledging more gold than before. Over the years, people have borrowed money and raised cash from banks and non-banking finance companies. According to Kotak Securities estimates, so far 621 tonnes out of 18,000 tonnes of gold was pledged by Indians. Banks have disbursed loans to the tune of Rs 1, 21,000 crore against gold worth Rs 1, 86,200 crore.
India’s gold jewellery exports climbed in August 2013, on improving US demand even though exporters faced tight supplies of the metal on central bank steps to tackle the country’s rising trade deficit.
Exports could climb in the coming months as the Reserve Bank of India has tied metal imports by the world’s biggest bullion buyer to its overseas shipments and the government recently clarified how the rule will work, potentially easing the tight supply situation for exporters.
India exported $561 million worth of gold jewellery in August 2013 compared with 2013 July’s $441.4 million, the Gems and Jewellery Export Promotion Council (GJEPC) said in a statement on September 24, 2013. In tonnage terms, this would mean 12-14 tonnes depending on quality.India’s efforts to stem buying of gold, the second-biggest item in its import bill, and protect its currency include a rule that 20% of all imports must be turned around and sold for export as jewellery.
But confusion over how the rule would work had virtually stopped imports since the end of July. They are expected to resume soon after a high-level meeting of government officials last week clarifying the rules.
Most banks would re-start placing orders with their suppliers after their stock, which is estimated to be at about one tonne, is cleared by the customs department at the airports just ahead of the peak Christmas season. A majority of India’s gold imports are made through banks.
India shipped out $2.68 billion worth of gold jewellery in value terms from April to August, down 59.4% on year. Total gems and jewellery exports fell 13.4 percent to $13.84 billion during the same period.
Exports usually total only about 60-70 tonnes per year and compete for markets from the Middle East to the United States against jewellery from Thailand and Turkey.
India had imported a record 162 tonnes of the metal in May; about three times the normal monthly average. Imports totalled more than 380 tonnes in April-July.
India’s total gold imports could now be below 750 tonnes in the year to March 2014, Arvind Mayaram, economic affairs secretary at the finance ministry said last week, about 60 tonnes per month under the new rule.
Table I : Global Gold Supply and India’s Demand for Gold
illustration not visible in this excerpt
Source: World Gold Council and Estimations from Directorate General of Commercial Intelligence and Statistics Data; Calendar Year; @ Financial year.
Source: World Gold Council and Estimations from Directorate General of Commercial Intelligence and Statistics Data; Calendar Year; @ Financial year.
Table II : Trends in Gold Imports
illustration not visible in this excerpt
Source: same as Table I
What explains the spike in gold imports in the recent years?
The volume of gold imports by India surged despite sharp increase in gold prices. Some possible explanations for the steep increase in demand for gold can be:
- When the global financial crisis erupted in 2008, the investors were standing at the margin and disinclined to invest in various assets including gold for some quarters in 2008 and 2009 as there was gloom and uncertainty from the crisis related developments. This has led to postponing of the demand for gold investment by investors as they cling on to bank deposit. But, from the mid 2009 onwards investors have started re-entering the gold market in a big way and the gold imports started rising. The pent up demand for gold resulted in large gold imports thereafter.
- Another reason for the increasing imports may be the sustained increase in gold prices in India. The gold prices have increased markedly over the period April 2008 to March 2012. Investors have reaped the benefit of attractive returns as the gold prices were increasing, that led to further investment in gold, giving impetus to further rise in gold prices. Rising prices of gold and imports of gold mutually reinforced each other. Investors seized the opportunity of investing in gold at temporary falls in gold prices.
- Furthermore, devaluation in Indian currency rupee, leads to more investment in assets that give high returns in long run. Gold is such an asset, which gives huge returns in short as well as long period. Cash in hand gets depreciated over long period of time as a result of inflation, but if this cash is invested in an asset like gold, it will yield huge returns when disinvested. Also, gold acts as security against collateral according to RBI’s latest statement as on Tuesday, September 17, 2013.
Impact of gold imports on India’s external sector stability
Gold has been imported mainly through designated banks and MMTC. During 2009-10, 2010-11 and 2011-12, gold imports through designated banks amounted to 547 tonnes, 634 tonnes and 603 tonnes respectively. During 2011-12, gold imports through banks are estimated to be around 56 per cent of total gold imports.
According to the research by the World Gold Council, the future gold purchase intent in India has remained stable in recent years despite sharp increase in prices. According to CMIE, due to the launch of gold related mutual funds and ETFs, the demand for gold as an investment option is likely to remain high and is projected to grow by at least 3 per cent per annum up to 2020-21. CMIE’s estimate appears to be conservative, given the fact that import of gold grew by more than 12.0 per annum during 2009-10 to 2012-13.
In order to examine the impact of gold imports on India’s external sector performance in general and trade deficit in particular, five alternative scenarios are assumed based on growth in quantity of gold imports, international gold prices and export content of imports. For estimating India’s Nominal GDP in terms of US dollar, IMF’s projections of growth for GDP at current prices (in US$) have been used.Various scenarios for gold import growth and gold prices, the net gold imports as ratio to GDP is likely to be in range of 1.8 per cent to 2.4 per cent in next few years. To this extent, India’s trade deficit and current account deficit will be adversely affected. Unless gold imports are converted into re-exports or volume of gold import does not moderate, increasing quantum of gold imports not only stresses India’s CAD but would also be a drag on India’s foreign exchange reserves.
Impact of high Gold Import on Current Account and Balance of Payments
Since, India is the largest importer of gold in the world; yet the imports of gold by India have been rising unabated in recent years notwithstanding the sustained increase in gold prices. Such large import of gold, when the gold prices are ruling high is one major source of bulging trade deficit. The deterioration in Current Account Deficit (CAD) due to large gold imports has implications for financing the same, which would reduce the foreign exchange reserves and could become a drag on the external debt. In this context, a major concern emerged is the impact of huge gold imports on external stability.
The commercial balance or Net Exports (X-M) is the difference between the monetary value of Exports and Imports of output in an Economy over a certain period of time, measured in the currency of that economy. It is relationship between Nation’s Exports and Imports. A positive balance is known as Trade Surplus if it consists of Exporting more than what is imported; a negative balance is referred to as a Trade Deficit or, informally, a trade gap.
In economics, the Current Account is one of the two primary components of Balance of Payments, the other being Capital Account. It is the sum of the Balance of Payment (i.e., Net Revenue on Exports minus payments for Imports), factor income (earning on foreign investments minus payments made to foreign investors) and cash transfers. The Current Account balance is one of the two major measures of the nature of country’s net foreign trade (the other being net capital outflow). A Current Account Surplus increases country’s net foreign assets by the corresponding amount, and a Current Account Deficit does the reverse. Both the government and private payments are included in the calculation. It is called the Current Account because goods and services are generally consumed in the current period.
It is generally considered that a Current Account Deficit (CAD) of 2.5 to 3.0 per cent is sustainable for India. In 2011-12, external sector resilience has weakened mainly due to higher current account deficit, which in turn was largely on account of worsening trade deficit. The trade deficit increased on account of a host of global and domestic factors, which led to moderate growth in merchandise exports and higher growth in imports. Two commodities that led to higher imports were POL and gold. Gold contributed nearly 30 per cent of trade deficit during 2009-10 to 2012-13, which is significantly higher than 20 per cent during 2006-07 to 2008-09. Analysis shows that trade deficit without net gold imports would have been 2.1 percentage points of GDP lower than that recorded during 2011-12.Accordingly, it would have reduced the CAD to the same extent in 2011-12. It is also estimated that had the export content of gold import been maintained at 41.0 per cent (as was in 2008-09), in subsequent years, the trade deficit as a percentage to GDP would have been 9.7 per cent in 2011-12, instead of historic high of 10 per cent. In other words, due to falling gold re-exports, India’s trade deficit as well as CAD as ratio to GDP worsened by 0.3 percentage points in 2011-12.
During 2011-12, high trade deficit caused, inter alia, by high gold imports led to worsening of CAD. Had the gold imports in India grown by 24 per cent (an average of growth in world gold demand during part three years) instead of 39 per cent in 2011-12, the current account deficit would have been lower by approximately US$ 6 billion and CADGDP ratio would have been 3.9 per cent instead of 4.2 per cent. Even though capital flows were higher in 2011-12, they remained lower than required to finance high CAD.
Consequently, there was a drawdown of forex reserves to the extent of US$ 12.8 billion. Drawdown of forex reserves has important implications for external sector vulnerability indicators, viz., import cover, ratio of reserves to external debt, in particular short-term debt which market players monitor closely. It may be noted that due to current account stress, partly emanating from high gold imports and insufficient capital inflows, various measures were taken to facilitate external flows through FII in corporate bonds and government securities, ECBs, NRI deposits, particularly in H2 of 2011-12. Since recourse to such flows pose implications for external debt (an increase of around US$ 22 billion in H2), there is a need to curb the stress in external sector emanating from current account, which to some extent has been caused by rise in gold imports in recent years. In a situation, when global economic and financial environment does not seem to be supportive of either export growth and foreign capital flows, such unproductive imports may prove to be costly in terms of loss of foreign exchange reserves.
The Reserve Bank has developed an external vulnerability index* which takes into account various measures of solvency ratios designed to reflect the vulnerability of the Indian financial system to external risks. Since gold imports contribute significantly to current account deficit, it can be, by deduction, said to cause the country’s external vulnerability to go up.
*The External Vulnerability Index is based on a set of external solvency indicators designed to reflect the vulnerability of the Indian financial system to external crises. It consists of Current payments/Current receipts, Average monthly imports/Foreign exchange reserves, Share of short term debt in total debt, debt stock/GDP ratio, CAD/ GDP and Debt service ratio.
Policy Measures adopted by Central government and RBI
Many measures have been put in place to ebb the gold imports. Duties have been levied, and administrative brakes have been applied to impede gold imports, but all these have met with limited success. Levy of too high import duty is counter-productive as it encourages smuggling. Entry of gold through the smuggling route has a corrosive impact on the economy.
India has taken several steps this year, including raising the tax on bullion imports three times, to curb demand of the precious metal to reduce its trade deficit and support a weak rupee. Gold is the biggest non-essential item in India's import bill.
The first salvo: Hike duty and taxes
Jan 21 - The government raises gold import duty by 2 per cent to 6 per cent.
JAN 22: Duty on raw gold more than doubled to 5%
JAN 30: Finance Minister P Chidambaram says no plans for additional taxes or curbs on gold imports.
Value and quantity restrictions
Feb 1: The RBI plans to introduce three to four gold-linked products in the next few months.
Feb 6: The RBI says it would consider imposing value and quantity restrictions on gold imports by banks
Suspending cheaper Thai gold jewellery imports
Feb 14: The central bank relaxes rules on gold deposit schemes offered by banks by allowing lenders to offer the products with shorter maturities
Feb 20: Trade ministry recommends suspending cheaper gold jewellery imports from Thailand.
Feb 28 - India keeps its gold import duty unchanged in its annual national budget, defying industry expectations.
Feb 28 - India proposes a transaction tax of 0.01 per cent on non-agricultural futures contracts including precious metals.
People, please don't buy gold!
March 1: Finance minister appeals to people not to buy so much gold.
March 18 - The Reserve Bank of India says it is examining banks that sell gold coins and wealth management products to identify "systemic issues", with a view to closing any legal loopholes.
April 2 - Finance Minister, P. Chidambaram suggests unlikely to raise the import tax on gold further to avoid smuggling and would instead introduce inflation-indexed instruments.
MAY 3: The RBI restricts the import of gold on a consignment basis by banks
Jewellers stop selling gold bars and coins
JUN 3: Finance Minister, says India cannot afford high levels of gold imports and may review its import policy
June 5 - India hikes gold import duty by a third to 8 per cent.
JUN 21: Reliance Capital halts gold sales and investments in its gold backed funds
JUN 24: India's biggest jewellers' association asks members to stop selling gold bars and coins, about 35% of their business.
JUL 10: India's jewellers could continue a voluntary ban on sales of gold coins and bars for six months.
JUL 22: The RBI moves to tighten gold imports again, making them dependent on export volumes, but offers relief to domestic sellers.
JUL 31: India hopes to contain gold imports well below 845 tonnes that were shipped last year, says FM.
The final solution
AUG 13: India hikes import duty on gold for a third time in 2013 to 10%. Customs duty on gold Dore bars, ore or concentrate increased to 8% from 6%.
AUG 14: India turns the screws on gold buying again; banning imports of coins and medallions and making domestic buyers pay cash.
SEPT 17: India increased its import duty on gold jewellery, the fourth time from 10 per cent to 15 per cent setting it higher than the duty on raw gold in a move to protect the domestic jewellery industry.
Hinting at more measures to curb gold imports, India's Prime Minister, Manmohan Singh, admitted in Parliament on August 30th that the current account deficit had gone up sharply and that it was affecting the value of the rupee. In his statement on the current economic situation he made several references to gold that rung alarm bells across the country.
The same day, the government raised the tariff value on gold imports while the Forward Markets Commission hiked margins on the precious commodity in futures trading - twin steps that were taken to control inbound shipments of the precious metal and check volatility in its trading.
While the tariff value of gold has been hiked to $461 per 10 grams from $432, the commodity markets regulator Forward Markets Commission has hiked initial margins in gold futures to 5%, besides an additional margin of 5% on all gold, effective September 2. Tariff value is the base price on which the customs duty is determined to prevent under invoicing.
Post noon on September 2, gold prices zoomed to an all-time high of $522.54 (Rs 34,500) per ten grams in the Mumbai market, with the rupee hitting an historic low of 68.75 amidst a firm global trend.
The Indian government has come out with the idea of the Inflation Index of Bonds to address this concern of the investing public. These bonds will be launched soon. As the name suggests, the holder of the bond will get a buffer against inflation-induced fall in the value of his savings through higher yields.
The success of these Inflation Indexed Bonds (IIBs) will need some good ground work and mobilization. The fine print of the various conditions of its operation must be very clearly explained to the investing public, the agents, NBFCs and the banks. Clarity of the terms and conditions will improve the popularity of the IIBs. Greater accessibility and convenience for the bond holders should be improved. If everything goes well, the IIBs will become popular and help in dissuading people from buying gold as an inflation-offsetting savings option.
Possible Way Out
What is required is to address the larger issue which is to encourage the substitution gold purchases with alternate investment options available in the financial sector which shall also help in increasing the productive capacity of the economy. In order to achieve this objective some of the initiatives that can be taken are:
- Increase the reach of Banks - growing demand for gold purchases in the country is an indication that households with high levels of savings are looking at options available to invest their savings. As per a World Gold Council Report India has one of the highest saving rates in the world; estimated at around 30% of total income, of which 10% is invested in gold. Therefore it is important that the financial sector taps into this huge saving reserve.This is particularly true for the rural areas where according to the same World Gold Council Report only 21% of rural India had access to formal financial sources. Therefore lack of availability of alternate avenues of investment that might be resulting in heavy gold purchases.
- Innovative means of alternate investments must be considered - It must be understood that it is easier for a rural person to buy gold jewellery than opening a deposit account in a bank, due to various documentary formalities that are required. In the competitive environment, banks have to contend with the transaction cost associated with servicing retail deposits and credit accounts.The government can make use of its vast network of post offices in order to delivering financial services to the otherwise excluded sections.
- Liquidity quotient of alternate investment instruments - a prime reason behind increased gold purchase is its liquidity aspect, which is in case an individual requires money he can immediately sell his gold for cash. This is usually not the case with other financial products as redeeming them usually takes time. Information technology could play an important role in facilitating retail banking in rural areas. However, in rural areas low level of technology penetration coupled with low levels of literacy are a major obstacle for enhancing the outreach of IT enabled banking services. In this context, there is a need to recognize the role of fiscal empowerment relating to spending on social sector such as education.The government can also consider introducing highly liquid across the counter instruments with the government guaranting buybacks.
- Massive education campaign must be launched – to create awareness amongst the public at large as to how unnecessary piling of gold stocks with households is not only adversely impacting the current account position of the economy but also what it is doing is increasing the level of black money circulation in the economy. This is happening because the purchase and sale of gold is being done in cash thereby hurting the government on two fronts. Firstly, the purchasing gold against cash gives an individual an opportunity to convert his black money into white. Secondly, the cash received by the seller also remains undeclared and thereby no tax will be paid. On top of this the gold imports are being financed by the hard earned foreign exchange. Therefore it is imperative for the government to educate the citizens of the country about the adverse impact of rising gold imports.
Buoyed by better-than-expected Q1 current account deficit (CAD) numbers, Finance Minister P. Chidambaram said he is confident of closing the fiscal with a better set of numbers than initially projected. The minister also said economic growth closer to 5.5 per cent should be considered very satisfactory and that there is "still some speculation" in the forex markets.The Minister had emphasised that 3.7 per cent CAD in 2013-14 is a "red-line" and will not be breached under any circumstances.
The large and growing demand for gold in India is putting a burden on India’s current account balance. Domestic gold production is negligible and the resultant gold imports directly contribute to the widening of the current account deficit. Notwithstanding increasing prices of gold, the volumes of gold purchases are induced by the prospects of getting good appreciation. The gold imports appear to be price inelastic in India. In a country with over one billion population, with social customs warranting purchase of gold for specific occasions, irrespective of the price, there will be a core component of demand for gold imports. Emergence of a new class of investors who has appetite for investment in gold for real returns also adds to the demand and thereby to imports. In short, the current trend in quantum of gold imports appears to be making India’s external sector vulnerable in terms of rising trade and current account deficits which, in the absence of adequate foreign capital flows, can have implications for maintaining adequate foreign exchange reserves buffer. While we coped up with such large imports, so far, if this trend continues the gold imports will have adverse implications for the external sector management, as export performance is not robust.
Thus there is a need to moderate gold imports by adopting different demand related measures like fiscal measures, designing innovative financial instruments that can provide real returns, by promoting investor literacy and education so as to convert rural and urban demand for physical gold into investment in gold related instruments, introducing new gold-backed financial products to reduce demand for gold, limiting on the volume and value of gold to be imported by canalising agencies and nominated banks, imposing more export obligation on importers; and supply related measures like recycling of domestic gold, introducing tax incentives on instruments that can impound gold, etcetera.
Reportedly around 95% of the requirement of gold is imported. In the month of May this year alone 162 tonnes of gold was reported to have been imported. Gold is only next to crude oil for the import of which billions of dollars are expended annually. With the economic slowdown in Europe and elsewhere our exports are slack, unable to match the outgo of dollars for imports. Dollars have thus become scarce, seriously affecting the value of our own currency. If this situation persists prices of all consumables are likely to rise, adding to the prevailing high rate of inflation. Apart from a few millions sinking into poverty a fear has been expressed that we may face a 1991–like situation when we had to mortgage away our gold. Perhaps, the appeal of the Finance Minister has to be viewed in this context.
Gold, therefore, is something which is precious and continues to be chased by the rich or poor and by the corrupt. Its demand is highly unlikely to wane at any time soon unless restrictions are placed directly or indirectly for its acquisition.
High imports of Gold pushed CAD to 4.9 % of GDP to $ 21.8 billion in the April to June Quarter of the Current Fiscal, RBI stated as on September 30, 2013,although CAD had declined to 3.6% in January to march quarter after touching a record high of 6.5% in the October to December quarter. The government plans to bring down CAD to 3.7% or $ 70 billion in the 2013-14 fiscal from 4.8% or $88.2 billion in 2012-13.
However, Imports of gold for the quarter ended September fell by over 77 per cent in value and 28 per cent in volume, according to finance ministry data.At 12-15 tonnes, the imports in September 2013 are estimated to be much lower than in the same month last year. The overall import bill for the July-September 2013 quarter on account of gold will be $2.7 billion as against $11.9 billion in the same period last year. That should help keep the current account deficit under control. The biggest reason for the sharp fall in imports in the quarter has been the restrictions imposed by the RBI.
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