The government’s decision to raise customs duty on gold to 12.5 per cent from 10 per cent will result in additional 4,000-5,000 crore of revenues, said Kotak Institutional Equities in a report. However, it will increase the domestic price of gold by 2.5 per cent and revalue the entire stock of gold with Indian households by the same amount, it added. India has been ‘exporting’ its savings through large imports of gold and precious stones and has to rely on foreign capital to bridge the gap between savings and investment (CAD), the firm said. Incidentally, India’s net imports of gold have exceeded FPI inflows by $100 billion over FY2011-19.
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