Gold smuggling

(Guinness Record Holder & RTI Activist)

Ever since Union government has raised import-duty on gold now to ten-percent, gold-smuggling has become quite profitable. Investment in smuggled gold is through unaccounted money either in form of solid gold or as jewellery. Sincere steps should be taken to transform currency-circulation in banking transactions so that surplus currency may be ordinary ‘paper’ for all practical purposes. India should follow sensible advanced countries by discontinuing circulation of higher-denomination notes of rupees five hundred and above because such currency is used as black money to buy gold. All sale-purchases exceeding say Rs 20000, even though payment may be made in parts, must be through banks. In case of cash-payments, currency-tax @ 30-percent may be imposed. All expenses exceeding Rs 1000 must be allowed when made through cheques/ drafts. Payments of essential services like water, telephone, electricity and municipal taxes for bills exceeding Rs 1000 must be by cheques/ drafts only. Drafts/ Pay-Orders/ Traveller-cheques must carry names and address/ account-numbers of purchasers with reduced validity-period of say 45 days to check their misuse as ‘benami’ drafts for carriers of black money. Bulk sale of accounted gold is done in unaccounted money by drawing wholesale invoices in amounts below rupees twenty thousand, which can be effectively checked by drastic cut in currency-circulation.

Reserve Bank of India (RBI) should take some concrete steps to keep gold-prices in control by banning forward trading of the yellow metal. Since India is biggest consumer of gold, its demand in India also determines rise and fall of international prices of gold. It was wrong that Indian government succumbed to political and other pressures when Indian Finance Minister had to take proposal to impose excise-duty on jewellery from the Union Budget for 2012-13 which could effectively check use of black money in purchase of jewellery. Idea of re-introducing maximum 14-carrot gold for jewellery can be re-introduced with 10-percent excise-duty on jewellery.