The Senior Analyst Jan. 2014 | Page 27

THE SENIOR ANALYST Year Jan 2014 2009-10 Budgetary Outlay 2010-11 2011-12 2012-13 39,000 40,000 31000 33000 EXHIBIT#4 (http://164.100.129.6/GRAPH/graphnewx ml.aspx) CONCLUSION to the verge of financial bankruptcy and becoming a default on its external balance of payment obligations. This crisis was primarily caused by currency overvaluation and large and imbalanced fiscal deficits. As an emergency response, Reserve Bank of India had to airlift 47 tons of gold to the bank of England to raise funds and to tide over this critical situation. To put an end to this debate of disinvestment, it is evident that roughly Rs. 50000 crore is required to ensure an effective functioning of these programmes. And what else can you do with the public money if not spending for them. We end with a thought that though implementation and finding new ways once we divest stakes in these CPSE to 51% still remain a challenge. By V.V. Raviteja & Neeladyuthi.K (IMT Ghaziabad) GOLD and CAD The Yellow Fever of CAD Bollywood should be given a vote of thanks to glamorize Gold Smuggling by the choice of profession by most of the villains. As gold imports were banned until 1992, it was the only option open to bring gold into the country. Post liberalized India saw a sharp rise in the consumption of the yellow metal by being the highest consumer in the world. But lifting off the bans had no effect on the smuggling business. Raising the import tax on gold had also increased the insatiable demand for gold in India. These desire combined with greed had acted like an incentive to skip the levy and get more gold in India. Importance of Gold in Economy Since 1985, India had payment problems and in 1991, the foreign reserves of India had dropped to such a point to support the country for three weeks’ worth of imports which had brought India Gold Imports has been one of the major contributors to the ever widening Current Account Deficit in India .India imported a whooping USD 38billion in the first three quarters of this fiscal year. The crux of the problem is that the investors are shunning the glitter of the gold whose prices slums at regular intervals. On the other hand, crazy Indians are sacrificing their currency and country’s bargain for gold. Buying millions of dollars’ worth of foreign gold, it disrupts the balance money by sending Indian cash overseas and thus driving down the value of the money. Gold is synonymous with security to hedge against inflation. It is generally viewed by 2 billion people more as a means of savings. As bank has a minimum balance requirements and other prerequisites, the common people hold their assets in form of gold to use as collateral during bad times. Come to think of it, even the lawyers and many businessmen buy gold as a secure financial strategy .With Indian capital market and real estate business losing its lustre, gold securities Page 27