Do it yourself

Lower duty on gold, wider trust deficit In her final budget for FY25 (presented in July 2024), the finance minister had cut the import duty on gold from 15% to 6%. No clarity was provided for this measure in the budget papers. It is widely speculated that the move was to help the RBI in augmenting its gold reserves and bring back its gold stock held with foreign custodians; and also lower the domestic gold prices to help the government to redeem the sovereign gold bonds at a lower price. The move has resulted in higher consumer demand for gold, resulting in larger quantities of gold import having adverse impact on the current account balance. This is prima facie contrary to the intent of the government to encourage household savings to move away from physical assets like gold towards financial assets; and maintain a healthy current account balance to support INR and bond yields. The move dented the credibility of the government and widened the trust deficit a little more. Cooking...

Besides the hydrocarbons (crude oil and natural gas), edible oil is perhaps the most critical item for Indian households, where our country is largely dependent on imports. In 2021 we imported ~US$17.5bn worth of animal & vegetable fats and oils. Volume wise, the annual domestic consumption of edible oils is around 25 million tonnes; whereas we produce less than 12 million tonnes. Thus we rely on imports for over half our requirements, making India the third largest vegetable oil importer, behind USA and China, despite a low per capita consumption of edible oil of less than 6gms a day. Despite all efforts to increase the domestic production of edible oils, our imports of edible oil have grown about 175 percent in the past decade. Area under production of oil seeds in India has hardly increased in the past three decades; though the yield has improved. Last year, the central government set a target to bring...