80:20 gold scheme: UPA-II flouted rules to benefit private firms, says government

NEW DELHI: The government on Monday, issued a statement clarifying its stand on the 80:20 gold scheme, introduced during the UPA-II regime. The scheme, which mandated that at least 20 per cent of gold imported is to be used for export, was launched in August 2013 by the Congress-led UPA (United Progressive Alliance) government to deal with the country’s widening current account deficit.

The Narendra Modi-led NDA (National Democratic Alliance) government on Monday pointed out that the scheme which initially allowed only banks and public sector undertakings (PSUs) to import gold, was extended to Premier Trading Houses (PTHs) and Star Trading Houses (STHs) on May 21, 2014 by the earlier regime, even as at that time, the model code of conduct was in place on account of Lok Sabha election 2014.

The charges levelled in the statement are a reiteration of allegations made by Law Minister Ravi Shankar Prasad in a press conference held last week. Prasad had claimed that the then Finance Minister P Chidambaram had aided seven private companies, including PNB fraud-accused Gitanjali Gems, under the 80:20 scheme.

Detailing on the gains made by PTHs and STHs under the scheme, the government release stated that 13 trading houses made a ‘windfall gain’ of Rs 4,500 crore between June 2014 to November 2014. This was owing to the fact that there was a shortage of gold in the domestic market at that time and a premium of Rs 2 lakh per kilogram was being charged from domestic customers. The said period also saw an alarming jump of 320 per cent in gold imports by STHs and PTHs, according to the statement. It further alleged that the export obligations under the scheme was met by these trading houses via shell companies in offshore locations.

The statement stressed on the fact the NDA government after coming to power, scrapped the scheme in November 2014. The government has said that it will take ‘necessary actions’ against the people instrumental in providing ‘undue advantage’ to the involved trading houses.

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