Gold smuggling has surged in India in the wake of government efforts to crack down on imports of the yellow metal.
Indians have had a long love affair with gold -- many use it as a way to save rather than keeping cash in bank accounts.
But all that gold buying led to ballooning current-account deficits as capital fled the country to buy gold from foreign countries. As a result, India’s previous government cracked down on the flow of gold into the country, banning the import of coins and medallions, hiking the import duty on gold to 10 per cent, and mandating that gold importers present proof that 20 per cent of their imported gold will eventually be re-exported after it has been hammered into jewellery.
That caused an increase in gold smuggling, where people sneak gold into the country and avoid duties and restrictions. There was the curious incident where gold was found stuffed inside lunchboxes and hidden in the bathroom of an incoming Jet Airways flight.
Now India’s new government – under the Bharatiya Janata Party’s Narendra Modi – has released statistics showing the smuggling problem is getting much worse.
The amount of seized illegal gold imports jumped 534 per cent in 2013 to more than 1,267 kilograms, up from just 201 kilograms in 2012.
That stands in sharp contrast to legal gold imports, which were down about 34 per cent, from around 1014 tons to just 670 tons.
Gold is important on the subcontinent, where people often trust its value well above that of the often fluctuating rupee.
It is also associated with the four-handed goddess of wealth and has been traditionally used instead of cash to save money in volatile times, particularly by farmers and other low-income Indians. It is also draped generously over Indian brides, given as wedding presents and is often used as a bride’s dowry.Report Typo/Error
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