India’s efforts last year to reduce its runaway trade deficit by regulating the gold trade appear to have paid off. The country’s trade deficit was $10 billion in April, down from $18 billion in the same month last year. At the same time, exports grew 5.26% to $26 billion over $24 billion in April 2013.
India is one of the world’s largest importers of gold, usually as a hedge against inflation. Last year the government imposed the so-called “80-20 rule,” which required a fifth of imported gold to be re-exported as manufactured jewelry. The impact of the curb has been boosted by a decline in inflation and a plateau in gold prices.
