NEW DELHI: The sharp fall in prices of gold and crude oil will have a positive impact on the Balance of Payment (BoP) in India, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said. This is because the country is a big importer of gold and crude oil.
This sharp decline will have a favourable effect on the Indian economy because it would balance the high current account deficit (CAD) and the status of BoP.
It was on April 16 that gold prices in India fell to Rs 26,440 per 10 grams following ongoing sell off in the international markets. While gold has seen a slight recovery in the spot and futures market, it’s still uncertain which way the prices will move.
Gold and crude oil contributes around 40-45 per cent in India’s total imports.
India's CAD, which is the difference between inflows and outflows of foreign currency, reached 6.7 per cent of the Gross Domestic Product (GDP) in the quarter that ended December 2012. This is also expected to ease with the falling gold and crude prices.