According to Mecklai Financial and Commercial Services vice president KN Day Sr, "India holds approximately 13,000 tonnes of gold (valued around $120 billion) in the form of ornaments and TT bars. Rising import is adding to this vast stock lying idle as a dead investment. If mobilized, this stock can help us reduce our trade deficit, external debt, even the country can achieve trade surplus."

The rise in the gold import is a cause of concern. At the end of current fiscal imports at around 800 tonnes annually may overtake that of crude oil. Therefore, the Centre is likely to announce some drastic measures. It is likely that gold deposit scheme may be introduced in the budget. The gold mobilised therefrom will help ease pressure of gold import," feels Adani Exports' head of treasuryRK Das.

Das feels the western world is dumping gold in the country and there should be some restriction on imports. "Gold-deposit scheme can be one way to mobilise idle gold. The banks should be allowed to hedge in global markets for managing their risks in bullion trade," he said.

According to Vadilal Financial Services analyst Satish Khandelwal, "The Government should frame a national policy on gold and a body like The Spice Board or the Coffee Board should be set up which will help channelise gold."

At present, substantial quantity of gold is lying in the form of unaccounted money. It is important that the Government brings this in the legal channel. Gold certificates can be useful in this regard. If the Centre announces some sort of amnesty scheme, the idle gold may come in legal channel. If it becomes legal it will boost the credit worthiness of the country. In 1991, it was the country's gold reserve that helped the Government to come out from crisis. Mobilisation will also add to the liquidity inthe bullion market, which is a one of the precondition for futures trading.

As the Indian bullion sector is linked to global markets, futures trading in gold is inevitable for survival. If traders can hedge their exposure may insulate them from the increasing volatility generated from movement in the international prices."

Says Khandelwal: "The Government should check gold imports which stands very close to crude oil imports. If left unchecked, it may jeopardized our balance of payments."

The rupee is appreciating since the Government hiked the import duty on gold last December, indicating a fall in import has eased the forex drain. A country like India cannot afford such a huge forex outflow.

Meanwhile, bullion traders have refrained from trading in physical gold awaiting various measures in the budget. Most of the trade is speculative. Traders prefer to take positions in the illegal bucket shop known as Comex trade. These centers even have parallel futures wherein traders and punters can takepositions. Each volume of one lot, or 1,000 oz per lot can be traded.

Even the designated canalising agencies are hesitating to make substantial commitments refrain from unfixing of positions. Volume are likely to pick up only after the budget proposals are announced and its full implications are interpreted by the trade.