The Planning Commission said on Friday it is expecting the Current Account Deficit to ease in the current fiscal with moderation in demand for gold.
"I think the turnaround on gold has happened. I think that to be reflected in smaller current account deficit this year," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters in New Delhi.
Huge gold imports have put pressure on the country's CAD, which in turn is affecting the value of rupee.
Last week, the government hiked import duty on gold to eight per cent from six per cent recently to curb demand for the precious metal.
It was the second hike in the duty in six months as gold imports touched an alarming 162 tonnes in May.
The imports touched a staggering figure of $15 billion in the last two months.
The Reserve Bank has also put restrictions on banks on importing gold.
CAD is the difference between inflow and outflow of foreign currency. It is expected to be 5 per cent in the last fiscal mainly because of surge in gold imports.
Elaborating further, Ahluwalia said: "There is certain natural demand of gold.
“The gold ornaments are part of people's perception of well being.
“But the demand of gold in last year was not natural. “It has doubled. That was due to speculative demand." According
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