Our bullion-dollar troubles can end if India goes for gold

It was a subdued Diwali this year. Gold trading on Dhanteras was down by 50%. Traders blamed it on mostly on the lack of gold supply which was 83% lower than last year. But policy makers cheered. Their draconian policy of restricting gold imports was working. India’s trade deficit had declined and the rupee had calmed. But it is a temporary victory. Gold smuggling is on the rise and will eventually triumph, undermining a great victory of the 1991 reforms, which was to kill the havala market.

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