Mon­eti­sa­tion scheme may help curb ris­ing gold smug­gling

Hindustan Times (Patna) - Live - - Business - Timsy Jaipuria timsy.jaipuria@hin­dus­tan­times.com

The gold schemes launched by the gov­ern­ment last week come at a time when the smug­gling of the yel­low me­tal is on the rise.

Over 886 kgs of gold, worth about `234 crore, was seized in the first quar­ter of 2015-16 alone, ac­cord­ing to the direc­torate of rev­enue in­tel­li­gence (DRI) sources. The num­bers, which are bound to in­crease, are in line with all-time high gold seizures of 2,372 kg and 4,082 kg recorded in 2013-14 and 2014-15, re­spec­tively.

“Such a fig­ure is wor­ri­some as the first quar­ter fig­ures are higher than the seizures made in en­tire 2012-13,” a se­nior rev­enue in­tel­li­gence of­fi­cial said on con­di­tions of anonymity.

The abil­ity of the gold mon­eti­sa­tion scheme (GMS) to re­duce smug­gling, mainly by re­duc­ing de­mand for phys­i­cal gold, will de­pend on how In­di­ans re­act to the scheme, since they nor­mally pre­fer to keep jew­ellery at home due the “sen­ti­men­tal” value at­tached with the yel­low me­tal.

“The seizures are in­creas­ing and sec­ond-quar­ter fig­ures are likely to be on sim­i­lar lines. Smug­gling has in­creased de­spite low gold prices,” sources said. De­mand, how­ever, may spike on Mon­day due to Dhanteras, a fes­ti­val when In­di­ans tra­di­tional buy gold.

Smug­gling has con­tin­ued un­abated in­spite of the gov­ern­ment re­mov­ing the 80:20 rule on gold im­ports last year. The rule meant that 20% of all gold im­ported had to be ex­ported by traders, who would use in­for­mal chan­nels to cir­cum­vent the reg­u­la­tion.

HT FILE

Shop­pers at a jew­ellery store in Mum­bai. De­mand for gold tra­di­tion­ally picks up on the fes­ti­val of Dhanteras.

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