08/12/2012 08:37:00

India Central Bank: To Suggest Steps To Reduce Demand For Gold Imports

By Sudeep Jain

MUMBAI--India's central bank will soon release a report making recommendations on how to reduce demand for gold imports, which would help improve the country's trade balance, a top central bank official said Saturday.

The report focuses on steps to enable the public to invest in gold without possessing it in its physical form, Reserve Bank of India Deputy Governor Subir Gokarn said at a management conference.

Mr. Gokarn didn't specify when the report would be released.

Stubbornly high inflation and a sluggish stock market have led Indians investors to ramp up purchases of gold over the past few years.

Gold imports, after oil, are the key reason for India's gaping current-account deficit, according to government data. The gap, as a proportion of gross domestic product, was 3.9% in the April-June period, outside the RBI's 2%-3% comfort zone.

Mr. Gokarn also reiterated the central bank's commitment to fight inflation, despite the sharp slowdown in the economy.

Getting inflation under control "is in the long-term interest of the economy in terms of supporting growth," he said.

The RBI's next rate-setting meeting is scheduled for Dec. 18. It left rates unchanged at its previous four meetings after a half-a-percentage-point reduction in April, which was its first rate cut in three years.

Write to Sudeep Jain at sudeep.jain@dowjones.com

(END) Dow Jones Newswires

December 08, 2012 03:37 ET (08:37 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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