The government on Monday said it would review the circumstances under which Premier Trading Houses (PTH) and Star Trading Houses (STH) allegedly earned windfall gains under the 20:80 gold import scheme implemented by the previous government.
The previous government had, in May 2014, allowed PTHs and STHs to import gold under the 20:80 scheme, which was earlier restricted only to banks and public sector enterprises. This, the NDA government has said, resulted in these PTHs and STHs earning a ‘windfall gain’.
The 20:80 gold import scheme was introduced in 2013 and mandated that at least 20% of gold imported was to be used for exports.
“Allowing private companies like PTHs and STHs to import gold provided these agencies an opportunity of windfall gain, as the benefit of the high premium on gold could now be availed of by these agencies,” the government said in a statement. “It has been observed by the CAG that gold imported by 13 trading houses during June 2014 to November 2014 was 282.77 MTs which means a windfall gain of about ₹4,500 crore to these agencies during this period, assuming a premium of ₹2 lakh per kg and 80% of imported gold supplied to domestic market earning the premium.”
“Even the export obligations were being met through export of plain jewellery, viz., bangles and chains, which were re-melted in offshore locations through front/ shell companies for the purpose of re-import,” the statement added.
The statement said that the decision to include the PTHs and STHs in the 20:80 scheme was taken shortly after the date on which the counting for the general elections was to commence, and at a time when it was known that there was a shortage of gold for domestic use and a premium between $100 to $150 per ounce (approximately Rs 2 lakh per kg) was being charged on domestic customers.
“The government will definitely examine the circumstances as to why private parties PTHs/STHs were benefitted by allowed to import gold under 20:80 scheme by the previous government when the government was in transition and will take necessary action against the persons involved,” the statement said.
“The increase in gold imports had benefitted disproportionately the STH/PTHs whose imports had shot up by 320% and who then accounted for 60% of all imports compared to 20% before May (2014),” the statement added. “This benefit stemmed from a de facto discrimination in their favour because the expanded 20:80 scheme privileged these STHs/PTHs, who being trades and exporters (of anything and not just gold), and best positioned to take advantage of the scheme.”
The new government decided to scrap the 20:80 scheme in November 2014.
“As has been pointed out by CAG, average monthly import of gold declined to 71.50 MT after abolition of 20:80 scheme (from December 2014 to March 2015) from a high of 92.16 MTs during June 2014 to November 2014 when PTHs/STHs were allowed under 20:80 scheme,” the statement said. “It was merely 33.60 MT per month under 20:80 during August 2013 to May 2014 before PTH/STHs were allowed in May 2014. Thus, it is clear that abolition of 20:80 scheme eliminated undue advantage to PTHs/STHs and import of gold was reduced.”
Published - March 13, 2018 09:13 pm IST
