Courtesy of Mish.
When news came last week that India tightened capital controls and banned gold imports, I pinged Pater Tenebrarum at Acting Man with a pair of comments.
- Looks like India is about ready to blow up
- Looks good for gold
He agreed on both counts.
“No Question” of Economic Crisis
On Saturday came an “official denial” in an amusing way. Please consider “No Question” of India Economic Crisis.
There is “no question” of India going back to an economic crisis experienced in 1991, as its rupee currency is now linked to the market and foreign exchange reserves are adequate, Prime Minister Manmohan Singh said on Saturday.
“There is no question of going back to 1991,” Singh said in a Press Trust of India report published by the Economic Times newspaper on its website, making reference to a balance of payments crisis the country suffered that year.
“At that time foreign exchange in India was a fixed rate. Now it is linked to market. We only correct the volatility of the rupee.”
The news agency report said Singh acknowledged India’s ballooning current account deficit, which he blamed on large imports of gold as a contributing factor.
“We seem to be investing a lot in unproductive assets,” Singh said.
India is trying to curb its citizens’ apparently insatiable demand for gold, through measures such as hiking import duties, banning the import of coins and medallions and making domestic buyers pay cash.
The government wants to hold bullion imports this year to “well below” last year’s figure of 845 metric tons.
Complete Agreement
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