Imports and demand will come down, easing current account deficit; round tripping will stop, but smuggling may rise.
The Reserve Bank of India has killed several birds with two stones. It has created walls around gold import simply by asking banks and nominated agencies not to import gold on consignment basis for domestic use. Second, it has said no import of gold on credit.
As a result of these measures, gold demand and import will come down, which in turn will help keep current account deficit on account of gold imports under check, while round tripping of gold will become matter of past. However, smuggling of the precious metal is likely to go up.
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