The crackdown had been unusually stringent and exactly how our previous blog had envisaged. A first commendable action by Pranab da.Both RBI and Finmin had taken several steps notably
1. Raised customs duty on gold imports to 4% from 1% last year. Great step but need to do more, atleast 10-20%
2. Secondary purchases of jewellary to be taxed at 0.3% of value, and brought under the radar of income tax authorities.
3. Gold finance companies to lend only 60pc LTV
4. Reporting of gold imports to become more stringent
These regulations are powerful and completely justified, and most likely should help a bit in freeing our country from this expensive addiction. The country cant afford to indulge in this useless commodity. An interesting afterthought on why RBI is also worried- possibly because every household that stores gold becomes a mini central bank by itself and in a way becomes direct competition to RBI and INR together