India looks at gold import curbs, diesel deregulation to pare deficit

The government is considering curbs on import of gold and deregulation of the price of diesel as it strives to cut the country's current account deficit, which has widened to a record 5.4 per cent of GDP in the September quarter.

With both current account deficit and the government's own fiscal deficit touching record highs, finance minister P Chidambaram has indicated raising the duty on gold and deregulation of the price of diesel with a view to curb consumption.

Gold imports constitute a substantial chunk of the country's import basket and is a huge drain on the current account deficit while the high international prices of crude oil has ensured a hefty oil import bill.

Addressing the media in New Delhi, Chidambaram said the government would, however, take a decision only after looking into the various dimensions of deregulating diesel prices.

"The government has to take into account several dimensions of issue before a decision can be taken," he said, adding that there are two views to the diesel price issue -  while some argue for deregulation, the others say that it would fuel inflation.

"On one column (of a newspaper) you will say, deregulate diesel price and on another column you will say inflation (will rise). These are not unidimensional issues, you cannot approach a issue from one dimension," he said.