Pre-budget Expectation - Mr. Sachin Kothari, Director, BullionIndia.in

"Previous government took tough decisions to bring down CAD by restricting import of gold through various measures like 80:20 rule and import duty hikes resulting in a sharp decline in gold imports. The imports went down from USD 15.80 billion in the fourth quarter of FY 2012-13 to 5.30 billion in the fourth quarter of FY 2013-14. This also helped the CAD to come down from 3.6% of GDP in Q4 of FY 2012-13 to 0.9% in Q3 of FY 2013-14 to 0.2 % in Q4 of FY 2013-14. With the CAD coming under control, there are a lot of expectations from the newly formed BJP led government. For starters they can reduce the import duty and continue with the 80:20 rule with slight modification which would gradually increase the imports of gold through official channels and give impetus to ailing bullion industry of India. The excise duty should remain unchanged at 0%.

We also expect that government will aim at improving the R&D facilities, as India is rich in mines, but the R&D is so poor that we are hardly in position to extract much of its abundant resources. As per the data available country has produced very few tonnes of Gold, which is less than 1% of all the value of metallic mineral production in the country. Improvement in R&D facility will reduce dependency on imports and in turn help the government to increase the Forex reserve. As the metal will be extracted locally, there will be less dependency on imports."

Source : Equity Bulls

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