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To: Bobby Yellin who wrote (29123)	2/27/1999 8:18:00 AM
From: goldsnow	Read Replies (4) \| Respond to of 116753

Lack of amnesty seen marring India gold plans 07:28 a.m. Feb 27, 1999 Eastern By Anshuman Daga BOMBAY, Feb 27 (Reuters) - A lack of amnesty could mar the success of the Indian government's plans to introduce a gold deposit plan and exempt interest on gold bonds from income tax, industry officials said. They said the scheme will not have a major impact on gold imports. Finance Minister Yashwant Sinha ruled out amnesty while announcing a new deposit scheme to mobilise idle gold stocks in the country in his 1999/2000 (April-March) budget speech on Saturday. Sinha said selected banks will be permitted to accept gold deposits and issue interest bearing certificates or bonds, which on maturity could be reclaimed in gold. ''Banks will be able to raise some amount of deposits, but the scheme will not have a major impact to cut imports because no amnesty scheme has been announced for gold holdings,'' said Kishore Zaveri, a leading importer based in the western city of Ahmedabad. Traders said the scheme could come a cropper without amnesty provisions as a large part of the gold stocks in the country were unaccounted. India is the world's largest gold market and imports almost all its requirements. India's gold holdings are estimated to be around 10,000 tonnes accumulated over generations and mainly comprising family heirlooms and jewels forming part of dowry gifts. ''The question is why people would convert gold into bonds since most of the gold held in India is not accounted for,'' said Satish Bansal, director of precious metals importer M.D. Overseas. But the government's plan to tap the idle reserves was seen as a good start. ''This is a good beginning though it might not immediately succeed because of operational deficiencies,'' said Nayan Pansare, group financial controller at Intergold India Ltd. ''The difficulty is that gold in India is not available in prime form. It is spread out among the investors, especially in the rural areas,'' Pansare said. ''Ornaments will have to be converted to gold and there might be some initial resistance to this,'' he added. There was also some disappointment over the government's decision to make no changes in the custom duty on gold. ''The budget did not meet our expections of an import duty cut,'' said Anuragbhai, an Ahmedabad-based gold importer. The government in January raised import duty on gold to 400 rupees ($9.40) per 10 grams from 250 rupees to moderate the flow of gold and earn additional revenue. ($1 - 42.54 Indian rupees) ((Additional reporting by Naveen Thukral in Ahmedabad) ((Bombay commodities, +91 22 265-9000 fax +91 22 264-1699, Bombay.newsroom+reuters.com)) Copyright 1999 Reuters Limited.