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Wednesday, November 20, 2013

Postal department drops gold coin tender

The department of posts under the ministry of communication and information technology has cancelled its tender for the supply of gold coins to be sold through various post offices. The tender was floated on November 6 despite a government ban on gold coin imports. It was to close on November 27. Without assigning any reason, the postal department - in a communication posted on its website on Tuesday - said that the tender was being cancelled.

The department's tender for gold coins, which are mostly imported, was floated at a time when the finance ministry had put a ban on import of gold coins and had also asked banks not to sell these coins, mainly to address India's rising current account deficit (CAD).

The cancellation came after S Sudhakar Reddy, general secretary, Communist Party of India (CPI), wrote to the PM to look into the conflicting position the two ministries were taking and also requested to make the government's position clear on import of gold coins. "If banks selling gold coins are strictly being discouraged, how could post offices selling gold coins be encouraged?" Reddy had questioned.

During the day, at a press conference in the city, finance minister P Chidambaram said that there was no difference of opinion between the two ministries and the postal department would withdraw the tender. On Monday, TOI had pointed out the diametrically opposite positions that the two central ministries had taken relating to gold coins and its imports.

In fiscal 2013, India imported 850 tonnes of gold valued at about $58 billion (nearly Rs 3.6 lakh crore), which was one of the main reasons for the country's burgeoning CAD that year. In the current fiscal, thanks to some of the government's steps to contain gold imports, the figure is estimated to drop to around 800 tonnes, but that is still a large figure.

The ban on gold coin imports was imposed in August through the Reserve Bank of India. And on October 22, finance minister P Chidambaram had said that the ban on the import of gold coins and medallions would continue. He also said that banks were directed to follow the ban strictly.

"Despite the...ban, I am surprised to see that while the finance minister holds a specific view on the import of gold coins, the ministry of communications and information technology holds a divergent view on the same," Reddy had written to the PM.

Due to the ban on imports of gold coins, not only banks, even private companies which were earlier selling gold coins, have stopped selling these coins which are popular as gift items and also investment products. Due to the ban, during the just-ended festive season not many people could buy gold coins for gifting, and were forced to look for alternatives, industry people said.

Source:-The Times of India

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