Traders claim gold smuggling on rise
BIRATNAGAR, OCT 08 -
Gold smuggling to India has increased and it has also fuelled illegal trading of Indian rupees, said traders. With the price of the yellow metal going up, sales have declined in the domestic market. At the same time, there has been a shortage due to smuggling.
Nar Bahadur Thapa, chief of Nepal Rastra Bank’s (NRB) Biratnagar Branch, said that the market situation shows that all the imported gold was not being consumed locally. “The shortage of gold in the market indicates that there is smuggling going on,” he added.
A shortage of the precious metal and fewer traders applying to the central bank to exchange US dollars are indications that it is being exported to India illegally, said bullion merchants. Meanwhile, Ganesh Bhagat, president of the Nepal Gold and
Silver Dealers’ Association-Biratnagar, said that fluctuating prices had kept buyers away. However, sources said that even though demand was low, smuggling of gold to India has increased attracting traders to the illegal business .
Traders said that the number of shops had inexplicably increased despite a slump in the bullion market. In the last fiscal year, 34 gold shops were registered at the Commerce Office, Biratnagar. This year, more than 22 shops have been registered as of the end of the first quarter, said Gopi Prasad Ghimire, chief of the Commerce Office. Meanwhile, the police have increased surveillance in response to reports of smuggling. DSP Umakant Chaturbedi, spokesperson of the District Police Office, Morang, said that they had launched a special plan to curb gold smuggling. “We have increased our vigilance against hundi and gold smuggling,” he added.
The country imported goods worth Rs 300 billion from India against exports of Rs 50 billion. This shows that Nepal has a huge trade deficit, and needs Rs 250 billion to conduct formal trading with India. The country also needs billions in Indian currency for pilgrimage, education, health, buying insurance policy, shopping in nearby bordering markets and paying for goods imported illegally from India. The shortage of Indian rupees has pushed up the unofficial exchange rate to Rs 170 from Rs 160 for IRs 100. They said that even though the price of gold was comparatively lower in the Indian market, smuggling of gold had swelled to take advantage of the increased exchange rate.
A trader involved in gold smuggling earns Rs 250,000 to Rs 300,000 per kg. Thapa said that that there was no shortage of Indian rupees but illicit trade was rife. “The number of customers approaching us to exchange Indian rupees has declined comparatively,” he added.
NRB Biratnagar has been exchanging Indian rupees equivalent to Rs 800,000 to Rs 1 million a day. Bank officials said that most of the customers were exchanging the money for education, health and pilgrimage purposes.
Source: The Kathmandu Post
