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The Indian government may impose curbs on domestic holdings of gold as Prime Minister Narendra Modi intensifies a fight against “black money”, news agency NewsRise reported, citing an unnamed finance ministry official. NewsRise did not provide further details. A finance ministry spokesman declined to comment on the report.
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Gold premiums in India jumped to two-year highs last week as jewellers ramped up purchases on fears the government might restrict imports after withdrawing higher-denomination notes from circulation in its fight against black money.
India is the world’s second biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts.
The move to withdraw higher denomination notes has already started to disrupt cash-based gold smuggling, officials have said. Scrap gold supplies were also set to halve this quarter as the cash crunch and falling prices make it difficult for consumers to liquidate their holdings.