The Central Bank, RBI has eased gold import restrictions immediately which is popularly known as 80:20 norms. RBI’s gold import restrictions (80:20 norm) was introduced by United Progressive Alliance (UPA) government on 14 th august 2013, to curb widening Current Account Deficit (CAD). This norm was introduced along with 10 percent duty.
This gold import restrictions mandated all gold importers to export 20 % of the gold imports. If this 80:20 norm is met only further gold imports are permitted. The gold import restrictions were introduced when CAD touched 4.7 % of Gross Domestic Product at $87.8 billion in 2012-13.
With this gold import restriction CAD dropped to 1.7 % of GDP, or $32.4 billion, in the fiscal year ended March 2014. Gold imports fell to $33.4 billion in 2013-14 from $55.8 billion in 2012-2013.
International oil prices have eased 30% in the current fiscal year to around $72 per barrel on 28 th Nov 2014 from $103 per barrel in April 2014 due to slowing demand in countries like China and procurement of alternative fuels like natural gas and shale oil has lowered demand. The fall in oil prices and other imports like gold has reduced the CAD to 1.7% of GDP in June from a peak of 5.38% of GDP in December 2012
These factors led the National Democratic Alliance (NDA) to ease RBI’s gold import restrictions.