'80:20 Gold Scheme' & Its Connection to PNB Scam Kingpin Mehul Choksi: Explained
The scheme was repelled by the Narendra Modi government in November 2014, after it was found marred with irregularities and causing losses to the exchequer.
New Delhi, Mar 5: Dragging former finance minister P Chidambaram into the financial scandal involving jeweler Mehul Choksi, Union Minister Ravi Shankar Prasad on Monday said the '80:20 gold scheme' was introduced by the erstwhile government to hep Choksi "convert his black money into white" by round tripping.
The remarks came after the Parliament's Public Accounts Committee (PAC) said the erstwhile Finance Ministry was misused by some jewelers, including the fugitive Choksi, for money laundering purposes.
Choksi, along with nephew diamontaire Nirav Modi, is the alleged kingpin of the scam which defrauded the Punjab National Bank (PNB) of at least Rs 11,400 crores.
Explained: '80-20 Gold Scheme'
The 80:20 gold scheme was introduced in August 2013 by the Finance Ministry, based upon the RBI's recommendation to regulate gold flows, in order to improve the rupee's standing against the dollar.
As per the policy, the duties on gold imports were reduced only on the condition that importers would directly export 20 per cent of the imported raw material, while upto 80 per cent could be retained for domestic use.
In May 2014, the outgoing government at Centre allowed seven companies, including Gitanjali Gems of Choksi to benefit through the 80:20 scheme.
"Why did the then finance minister gave 'aashirvaad' to seven private companies under 80:20 Scheme? On of them was Gitanjali. And why this came on May 16, 2014, the day when the nation had rejected them?" questioned Prasad.
"Chidambaram and Rahul Gandhi must answer why was this passed on the day of results to benefit these seven private companies," he added.
The scheme was repelled by the Narendra Modi government in November 2014, after it was found marred with irregularities and causing losses to the exchequer.
Its Connection to Choksi
The 80:20 scheme was used by Choksi, along with other jewelers, for "round tripping of black money and money laundering", claimed the PAC headed by BJP MP Nishikant Dubey.
Round tripping is the process whereby the "black money" or unaccounted wealth sent out of the nation is reclaimed by its bearer in form of "white money", or legal earnings.
Dubey, in his report, claimed Chidambaram was aware of the misuse but turned a blind eye to benefit the scandalous jewellers.
The scheme was designed only to benefit the money launderers as it was financially unsound for the exchequer, the parliamentary panel chief contended.
To validate his point, he claimed that the former government, in a bid to earn one US dollar (through exports), forgoed a duty of Rs 221.75. Thus, the cumulative loss to the exchequer, during the period when the scheme was active, amounts to Rs 1 lakh crore.
(The above story first appeared on LatestLY on Mar 05, 2018 07:38 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).