Controlling gold imports

In an economy that is as open as ours, it is, to my mind, a patent foolishness to try and constrain gold imports by increasing import duties. First off, this threatens to undermine one of the greatest victories of the 1991 liberalisation: the demise of the havala market. Second, if people want to buy gold – and, from the import figures, it is clear that they do – they will find ways to do it. Administering prices to try and control demand (or to mop up revenue) creates distortions in the economy, which are usually more pernicious than the original problem.

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