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Don't Buy Much Gold, Says Chidambaram

Finance Minister P. Chidambaram requested to people not to buy much excessive gold as a way of reducing heavy imports, speech on television a day after his 2013/14 budget astonished traders by keeping gold importation duty same at 6 percent.

But Chidambaram, who is attempting to control in imports by the world's largest bullion purchaser to edge a record current account shortage, told on Friday the duty was not yet high sufficient to gain smuggling.

"I'm expecting that the people of India will heed my request and will not need so much gold," Chidambaram said. Traders had anticipated a growth in duty to 8 percent in the budget after a 50 percent boost on January 21 from 4 percent was neutral by decreasing global prices. Chidambaram told on Friday the higher importation duty had "brought down gold imports to some degree."

But, traders said purchasing really decided up after a more than 2 percent drop in prices caused by a strong dollar. "Later the import duty, prices went fallen by 3,000 rupees and that prodded buying," said Kumar Jain, vice-president of the 12,000-member Mumbai Jewellers Association. Indians, for centuries controlled with gold as a mark of wealth and investment, imported 860 tonnes of yellow metal in 2012, fallen just 11 percent on a year before despite record high prices in the 2nd half.

Raising duty too excessive risks promotive illegal imports of gold but Chidambaram said he did not consider taxes were high adequate for that til now. "There is a factor at which more duties will only allure people to pander in much smuggling. I don't believe we have reached that factor yet," he added.

Chidambaram said ways to rigging the current account shortage, which hit 5.4 percent of gross domestic product (GDP) in the July to September quarter, were by promoting domestic production and rising exports.

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