The Government will consider relaxing curbs on gold import once the fiscal situation becomes more comfortable, Finance Minister Arun Jaitley said.
"Not at the moment (easing curbs on import of gold)...If our situation gives me more comfort level, obviously these are flexible polices. They are not engraved in stone that you can't change them," Jaitley told the news agency in an interview.
He, however, said the government has to be careful on current account deficit (CAD) and fiscal deficit. "On both CAD and fiscal deficit, I think we will have to be cautious and careful," he said.
In order to check rising CAD, the Government had raised import duties on the yellow metal to 10 per cent while RBI imposed curbs on import of gold and also laid down various pre-conditions for inward shipments of the precious metal.
As a result of combined efforts, imports of gold has been declining. They fell by 72 per cent to $2.19 billion in May due to restrictions imposed by the government.
India's CAD, which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.7 per cent of GDP in 2012-13, mainly due to rising imports of gold and petroleum products.
During 2013-14 India's CAD sharply narrowed to 1.7 per cent of the GDP or $32.4 billion. For the January-March quarter, CAD stood at $1.2 billion or 0.2 per cent of GDP, as against $18.1 billion, or 3.6 per cent of GDP in the same period of the previous fiscal, according to the RBI.
The highest ever CAD reported in 2013-14 had led to a slew of problems, including a heavy drop in the value of rupee, which touched an all-time low of 68.85 against the US dollar last August.
However, it has strengthened since then and is hovering around the Rs 60 mark. While talking about raising foreign investment cap in the insurance sector to 49 per cent, Jaitley expressed confidence that the proposal would get the support of his party, the BJP.
"What I have, reflects the policy of the Government and a party would support the Government. This issue has to go to Parliament. I have said that we prefer 49 per cent cap,” he said.
Currently foreign direct investment (FDI) is allowed up to 26 per cent in the private insurance companies. On when the proposal, which has been pending since 2008 in the Rajya Sabha, would be taken up by Parliament, Jaitley remained non-committal but said it would be taken up soon.
In his budget speech, Jaitley had said that the insurance sector is investment starved and there is a need to increase the composite cap in the sector to 49 per cent, with full Indian management and control, through the FIPB route.BJP has been opposing the increase in the foreign investment cap in the insurance sector. Welcoming Jaitley's decision on insurance sector Congress party has indicated that it will support the bill.
"We, unlike NDA, do not change stance when we are in government and (when we are in opposition). We will stand by (it) ... Provided every clause in it (Bill) is for the benefit of the common man," party leader Jyotiraditya Scindia had said when asked whether the Congress will support the Bill in Parliament.
The proposal to raise FDI cap has been pending since 2008 when the previous UPA government came up with Insurance laws (Amendment) Bill to hike foreign holding in insurance joint ventures. However, the Bill could not be taken up in the Rajtya Sabha because of opposition from several political parties, including