NEW DELHI
Finance Minister P Chidambaram appealed to people not to buy as much gold as a way to reduce hefty imports, speaking on television a day after his budget 2013/14 surprised traders by holding gold import duty unchanged at 6 percent.
But Chidambaram, who is trying to curb imports by the world's largest bullion buyer to curb a record current deficit, told CNBC television on Friday the duty not yet high enough to smuggling.
"I hope that people in India will take to heart my call and not as much gold requirements will," said Chidambaram.
Traders had expected an increase of the duty of 8 percent in the budget after a walk of 50 percent on 21 January of 4 percent was offset by falling global prices.
Chidambaram said on Friday the higher import duties had "brought down gold imports to some extent." But traders said buying actually picked up more than 2 percent after a fall in prices caused by a strong dollar.
"After the import duty prices went through 3,000 rupees and that encouraged buying," said Kumar Jain, vice-President of the Association of 12,000-member Mumbai jewelry stores.
Indians, centuries long obsessed with gold as a sign of wealth and investment, 860 tons of gold imported in 2012, from only 11 percent from a year earlier despite record high prices in the second half.
Increasing duty said too many risks encourage illegal imports of gold but Chidambaram that he didn't think taxes were high enough for that yet.
"There is a point at which more tasks require people to enjoy more smuggling will tempt. I don't think we have not yet reached that point, "he added.
Gold is second only to essential crude oil import in the BOM of Asia's thirdlargest economy, with coal and edible oils also expensive items.
Chidambaram said ways to tackle the current account deficit, which hit 5.4 percent of the gross domestic product (GDP) in July to September fourth, were by stimulating domestic production to boost exports and.
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