Bringing down inflation will check gold import: Rangarajan

Last Updated: Sat, Nov 24, 2012 13:40 hrs

Kolkata, Nov 24 (IANS) Prime Minister's Economic Advisory Council chairman C. Rangarajan Saturday laid stress on quick measures to bring down high inflation rate to check rising gold import, which has been a matter of concern.

"It is always true that whenever inflation remains high, then there will be a lot more investments in land and also in gold. That is why, I think, we should act very quickly to bring the inflation down," Rangarajan said here.

India witnessed $60 billion worth of gold imports during the last financial year, which contributed partially to the high current account deficit.

Rangarajan said import of the yellow metal remained high on the back of a high inflation rate and saving products not offering good returns.

Inflation based on Wholesale Price Index dipped to a nine−month low of 7.45 percent in October after remaining more than 7.50 percent for eight straight months.

Concerned over the high gold import, the Reserve Bank of India had earlier said it was planning to come out with financial products on the lines of gold exchange−traded funds to give options to investors and discourage import of the precious metal.

Rangarajan, however, said gold import during the current fiscal was expected to be less than last fiscal.

"The country's current account deficit in this financial year is expected to remain at 3.5 percent to 3.6 percent of the gross domestic product," he said.

The current account deficit stood at a record high of 4.2 percent of GDP last fiscal.

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