Gold imports, which have a bearing on the current account deficit (CAD), plunged significantly to USD 79.14 million during the first two months of 2020-21 due to a significant fall in demand in the wake of the COVID-19 pandemic, according data from the commerce ministry.
Imports of the yellow metal stood at USD 8.75 billion in the corresponding period of 2019-20. The decline in gold imports has helped in narrowing the country’s trade deficit, difference between imports and exports, to USD 9.91 billion during the period, against USD 30.7 billion a year ago.
Due to the significant narrowing of trade deficit, India recorded a current account surplus of USD 0.6 billion or 0.1 per cent of GDP for the January-March quarter against a deficit of USD 4.6 billion or 0.7 per cent of GDP in the year-ago period, the Reserve Bank of India has said.
Gold imports had been recording a negative growth since December last year. The fall in March, April and May was to the tune of 62.6 per cent, 99.93 per cent and 98.4 per cent, respectively. India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.
In volume terms, the country imports 800-900 tonne of gold annually. Gems and jewellery exports declined 82.46 per cent to USD 1.1 billion in April-May 2020.
Similarly, silver imports during the first two months of 2020-21 also dipped by 30.7 per cent to USD 437.89 million.