Govt Puts Finance Minister P Chidamabaram’s 80:20 Gold Scheme Under Lens India News
Allowing private companies like PTHs and STHs to import gold provided these agencies an opportunity of windfall gain, as the benefit of the high premium on gold could now be availed of by these agencies,” it said.
BJP last week accused the then finance minister P Chidamabaram of favouring some companies through the scheme. “... One of those companies was Gitanjali (of Mehul Choksi, who is tied to the PNB scam),” Union minister Ravi Shankar Prasad said.
In November 2014, the NDA government removed restrictions on gold imports, scrapping the controversial 80:20 scheme amid allegations of misuse by half a dozen companies. Curiously, the UPA government decided to lift several restrictions on gold imports on May 16, the day results of the general elections were declared.
The government said that at the time when the scheme was announced, it was known that there was a shortage of gold for domestic use and a premium ranging from $100 to $150 per ounce (approximately Rs 2 lakh per kg) was being charged from domestic customers.
The statement said that the CAG has observed that gold imported by 13 trading houses from June 2014 to November 2014 was 282.77 MTs which means a windfall gain of about Rs 4,500 crore to these agencies during this period, assuming a premium of Rs 2 lakh per kg and 80% of imported gold supplied to domestic market earning the premium.
It said that since the liberalization in May 2014, recorded gold imports had increased substantially averaging about 140-150 tons a month.
“The increase in imports benefitted disproportionately the STH/PTHs whose imports had shot up by 320% and who then accounted for 60% of all imports compared to 20% before May... it was found that the advantage to the STHs/PTHs extended in May 2014 was unfair...,” the statement added.
: The government said on Monday it will examine the circumstances under which private parties were benefited by allowing them to import gold under the 20:80 scheme by the previous UPA government when it was in transition and vowed to take action against those who might have made windfall gains.
Launched in August 2013 to reduce gold import and tame current account deficit, the 20:80 scheme required traders to export 20% of all gold imported while retaining the rest for domestic use. “However, from 21.5.2014, premier trading houses (PTHs) and star trading houses (STHs) were also allowed to import gold under 20:80 scheme. The then finance minister approved the modified scheme on 13.5.2014, even though the model code of conduct was in place since 5.3.2014 with the announcement of the Lok Sabha Polls, and the counting was due on 16.5.2014,” a government statement said .