The panel formed by Reserve Bank of India to suggest ways on how to control gold demand has made several suggestions on the matter, ranging from periodical assessment of the import of the yellow metal to permitting banks to buy gold coins back from public and imposing export targets on gold importers.
The report also advises on related matters such as import of the yellow metal, gold loans offered by non-banking finance companies (NBFCs) and suggests that the fiscal measures need to be revised to lower the rate of gold imports in the country.
Recently, in order to manage demand for the yellow metal, government had increased customs duty on gold from the earlier 4 percent to 6 percent. One of the suggestions says that the import duties levied on gold imports should be revisited at equal intervals to discourage imports of gold as warranted by the developing Balance of Payments (BoP) conditions prevailing in the economy.
In the report, the panel says, "While sharp increase in import duties is counterproductive, a well-modulated increase in import duty may reduce the demand."
Some of its other suggestions include increasing import duties as well.