Senior Congress leader P. Chidambaram on Friday said the Reserve Bank of India’s (RBI) move to shift around 100 tonnes of its gold kept in bank vaults in the UK to its vaults in India “makes no difference” to the Indian economy.
In a reaction to IANS, the former finance minister said there is “nothing wrong” in bringing gold kept abroad to the vaults in the country.
“Our gold is in a London vault. It is being brought back to an Indian vault. It makes no difference at all,” said the former finance minister when asked how this move is going to help the economy.
However, according to economist Sanjeev Sanyal, a member of the PM’s Economic Advisory Council, most countries keep their gold in the vaults of the Bank of England or other such locations (and pay a fee for the privilege).
“India will now hold most of its gold in its own vaults. We have come a long way since we had to ship out gold overnight in 1991 in the midst of a crisis,” he was quoted as saying in reports.
According to him, the shipping out of gold in 1990-91 was a moment of failure that “we will never forget”.
“This is why this shipping back of gold has a special meaning,” he pointed out.
In 1991, the country was in the grip of a severe foreign crisis with no money to pay for essential imports.
The then Chandra Shekhar government pledged gold to raise funds. The RBI then pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan, to secure $400 million.
As of March 31, the central bank held 822.10 tonnes of gold as part of its foreign exchange reserves.