Raghuram Rajan defends 80:20 gold import scheme, says ‘objective criteria’ was followed

Raghuram Rajan defends 80:20 gold import scheme, says 'objective criteria' was followed Raghuram Rajan defends 80:20 gold import scheme, says ‘objective criteria’ was followed. (Image: Reuters)

Days after BJP leader Ravi Shankar Prasad raised questions on the 80:20 gold import scheme, former RBI Governor Raghuram Rajan broke his silence and defended it. In an interview with CNBC-TV18, he said that under the gold scheme “objective criteria” was followed with the idea to liberalise gold market against the backdrop of foreign exchange crisis in 2013.

The 80:20 gold import scheme was brought in May 2014 when the government was in transition and rolled back in November that year. When the scheme was implemented Raghuram Rajan was the RBI governor and P Chidambaram was the Union Finance Minister.

“So, our job was to see is this done in a reasonable way. I have not been able to go back to the circular that were issued and the underlying discussions. What happens in this case is, the department takes care of it and talks to the government and issues them but as governor I do bear responsibility for any actions of the RBI,” Mr Rajan said in an interview to CNBC TV18.

“The people who didn’t make money objected against the people who did make money but the people who made money were objecting against others, this kind of thing keeps going on. Ultimately the idea was to bring back free trading, that’s what happened and that is a good thing,” the former governor added.

The 80:20 scheme was modified in May 2014 allowing major trading houses and star trading houses to import gold. According to Comptroller and Auditor General (CAG) 13 trading houses between June 2014 and November 2014 gained heavily due to the scheme. In a total, the gain was calculated to be Rs 4,500 crore.

While the 80:20 gold import scheme became a target of the government after the Rs 12,700 crore fraud was detected at the Punjab National Bank allegedly involving diamond czar Nirav Modi and his Mehul Choksi. It is Mehul Choksi whose company is under the scanner in the 80:20 gold import scheme as well. Raghuram Rajan also said that the bank fraud and the gold scheme involved companies from the same sector but the two should not be linked.

He also said that he was responsible for whatever decisions were taken by the RBI during his governorship. Meanwhile, the commerce ministry on Monday said that it examine the circumstances under which some private parties stood benefitted from the scheme. Earlier, only banks and PSUs like MMTC and STC were allowed to import gold for domestic use under the 80:20 scheme.

Source: Financial Express