World Gold Council on Tuesday said that curbing gold import may have short-term benefit in containing demand, but cautioned that consumers appetite for yellow metal will ultimately be fulfilled by the unauthorised grey market.
It suggested that the Government should treat gold as strategic assets, while advocating monetisation of country’s huge gold stock to support economic growth.
“We understand that part of the rationale for seeking to curb gold imports is to reduce the current account deficit and we recognise that a large current account deficit is unsustainable and needs to be checked,” WGC India Managing Director Somasundaram PR said in a statement.
However, he said that there are number of factors which influence the current account deficit and gold is one factor.
Noting that people buy gold as a long term investment to protect their wealth, he said: “Addressing this demand by curbing supply may have a short term benefit but this demand will be met by the unauthorised grey market and this will not be positive for either the economy or for society”.
Somasundaram was reacting to the government’s measures to curb gold imports, which have risen significantly in last two months.