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Gold smuggling rises heavily as government's efforts to curb go

  • NEW DELHI: The government's efforts to curb gold imports have resulted in the collateral damage many feared - a resurgence of smuggling. Cases involving gold seizures at airports have risen 10-fold in recent months, confirming the worst fears of critics that the strategy to raise duties to control imports of the precious metal would spawn a revival in its smuggling.

    Between April and June this year, authorities impounded gold worth Rs 942 crore in some 200 cases of smuggling, up 272% on Rs 243 crore in the year-earlier period that involved 20 cases, data compiled by the finance ministry shows. During the same period, India's official gold imports fell 56% to 131 tonnes, data from the World Gold Council showed, reflecting the impact of higher duties and rising prices.

    "If this is what is being reported in terms of seizures by authorities, the actual quantum of smuggling must be quite high," said Biswajit Dhar, director-general of Research & Information System for Developing Countries and a trade expert.

    Finance ministry data suggests gold smuggling may be back and thriving after the economic liberalisation policies of the early 1990s had all but put an end to the practice, in the process denying the Mumbai underworld one of its mainstay activities and Bollywood one of its staple themes.

    SURGE IN ILLEGAL IMPORTS TO HURT GOVT STRATEGY

    A rise in the illegal gold imports will seriously undermine the government's strategy to curb gold imports to check a runaway rise in the high current account deficit that has weakened the rupee and prompted warnings from ratings agencies. A spike in illegal imports could mean the actual demand slump may not be as much as shown by the official data.

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