Gold tops list of imported commodities

In the last fiscal year Nepal imported almost three times more gold than a fiscal ago.
"The country imported Rs 41.63 billion worth precious yellow metal -- the highest among all the imported commodities from third country -- in the last fiscal year," said the central bank. "It is 151.2 per cent more than in 2008-09, when the country had imported gold worth Rs 16.57 billion." In the fiscal 2007-08, country imported gold worth Rs 3.....billion only.
According to the traders, the import is around the double the domestic market demand. "Gold worth Rs 20 billion is enough for the domestic market," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers’ Association (Negosida).
Though, he claimed that the domestic market demand of the precious yellow metal has gone up to around 35 kg per day, the demand can be managed with around 20 kg. "Traditionally gold is used as jewellery but recently the trend of buying the physical gold bars has also picked due to investors' low confidence on share market and banks," he added.
"In the earlier months of 2009-10, less customs duty in Nepal might have prompted gold to be smuggled outside the country, but the trend has reversed after the government increased the duty and fixed daily quota at 10 kg that is half the market demand," Shakya said, citing the example of last week's Birgunj police arrest of two persons in possession of a huge haul of gold worth Rs 13 million being smuggled in a car to Nepal from across the border.
Though there is a debate on gold demand and consumption capacity of the domestic market, the government has last Wednesday banned the import of gold until further notice saying that the unchecked gold import has hurt the forex reserve and Balance of Payment (BoP).
earlier too, the central bank was forced to halt gold import after the BoP registered a huge deficit in the earlier months of last fiscal year. "The restriction has worked as the BoP deficit has come down to Rs 2.62 billion by the end of the fiscal from a whopping Rs 25.68 billion deficit in the first seven month of 2009-10," said a source at the central bank. "The gross foreign exchange reserves has dropped by seven per cent to Rs 266.57 billion in mid-July 2010 from a level of Rs 286.54 billion as at mid-July 2009."
Meanwhile, the row among the traders is bleeding the consumers white as they are compelled to pay around Rs 1,000 more in a tola (11.446 gram) than the international price.
As usual petroleum products tops the list of imported commodity from India. Nepal imported Rs 53.25 billion worth petroleum products from India in the last fiscal that is only 12.39 per cent higher than a fiscal ago.

Top 5 imports (overall)
1. Petroleum products -- Rs 53.24 billion
2. Gold -- Rs 41.63 billion
3. Vehicles & Spare parts -- Rs 23.77 billion
4. Other machinery parts -- Rs 15.88 billion
5. M S Billet -- Rs 14.32 billion