India's top policy advisory body, the Prime Minister's Economic Advisory Council headed by C Rangarajan, has urged government to discourage gold imports into the country and rather channel savings into formal financial instruments, MineWeb reported.
Rising prices of the precious metal, over 60% in dollar terms in the last couple of years, has bloated the country's import bill causing uneasiness among policy makers.
"Equally astounding is the fact that India imported more gold than the annual budgeted estimated expenditure outlay on water supply urban development and sanitation," added Rawat.
Imports may drop 7.1 percent to 900 metric tons this year, according to the median estimate in a Bloomberg News survey of eight analysts, brokers and jewelers including Rajesh Exports Ltd., the biggest gold-jewelry exporter. India bought a record 969 tons in 2011, according to the World Gold Council.
"Gold imports could fall to 220 tonnes in the first quarter, down from 286 tonnes of the previous year. Falling gold imports will reduce demand for dollars, aiding the rupee's appreciation against the greenback," said M Desai, bullion trader.
The review, details of which are awaited, has major significance in India since the Finance Minister is set to present the Union Budget in early March. Any proposed budgetary measures will dampen gold imports and affect physical demand.
Dasha Platonova, Editor in Chief of the Asian Bureau, Rough&Polished
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