Growing imports can be financed only by giving a big boost to India’s overall exports

The sharp hike in imports of gold and silver by 138% in April, reaching a total figure of $7.56 billion, has set alarm bells ringing. The resurgence of the gold rush raises fears, once again, of bloating the import bill and causing payment problems soon after government interventions helped reduce gold imports in 2012-13. A bloated import bill that exceeds export earnings can have serious adverse consequences on both exchange rates and prices which, in a vicious cycle, further incentivises the rush for gold.

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