The government is considering curbs on import of gold and deregulation of the price of diesel as it strives to cut the country's current account deficit, which has widened to a record 5.4 per cent of GDP in the September quarter.
With both current account deficit and the government's own fiscal deficit touching record highs, finance minister P Chidambaram has indicated raising the duty on gold and deregulation of the price of diesel with a view to curb consumption.
Gold imports constitute a substantial chunk of the country's import basket and is a huge drain on the current account deficit while the high international prices of crude oil has ensured a hefty oil import bill.
Addressing the media in New Delhi, Chidambaram said the government would, however, take a decision only after looking into the various dimensions of deregulating diesel prices.
"The government has to take into account several dimensions of issue before a decision can be taken," he said, adding that there are two views to the diesel price issue - while some argue for deregulation, the others say that it would fuel inflation.
"On one column (of a newspaper) you will say, deregulate diesel price and on another column you will say inflation (will rise). These are not unidimensional issues, you cannot approach a issue from one dimension," he said.