Monetisation scheme may help curb rising gold smuggling
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.
Shoppers at a jewellery store in Mumbai. Demand for gold traditionally picks up on the festival of Dhanteras.