NEW DELHI, March 15(UNI)- Professor J. D. Agarwal, director, Indian Institute of Finance (IIF) has said that the provision to allow import of gold upto five kg and imposition of a custom duty at the rate of the 15 per cent payable in foreign exchange and the simultaneous introduction of the Gold Bond Scheme would help in controling inflation in the country.

Talking on UNI, Prof. Agarwal said this would also boost the growth by reducing money supply in the country to the extent of around Rs 8000 crore, which is likely to be used to bring the gold. This investment may be forthcoming out of black money which is currently being generated in the economy and is responsible for the failure of various government prescriptions to control inflation and boost growth.

The partial convertibility of the rupee would also have a positive effect to control inflation, he said.

The two factors would jointly stop the havala transactions and smuggling Similarly, it would help the domestic users also as the prices of gold has come down, as also the difference between the official rate and market rate of the foreign exchanges.

It is expected that in due course of time the prices of gold would further come down to more or less at the international price level. Similarly the decline in foreign exchange official and market rate would make the havala transaction totally non-lucrative he added.

Prof. Agarwal advocated that these steps might lead to sharp decline in the demand for pound sterling and US dollars abeoad as the Non-Resident Indian's would now be keesn on bringing gold to India rather than any other consumer durables.

This could lead to release of foreign exchange abroad by the NRI's to buy gold and towards the payment of its duty to India.

The Indian Government is expected to earn around Rs 750 crore in foreign exchange through this scheme, he said.

Apart from this on a rough estimate around 200 metric tonnes of gold is being illegally brought into the country at an estimated price of around $2.26 dollar as the smuggling become non-profitable so a major chunk business would not be required, he said.

The legally imported gold would lead to higher employment opportunities for the jewellers and would earn more exports revenue for the country, he feft.

If these steps were implemented the Indian rupee could get back some respectability among the other foreign currencies in the world over a period of the next twenty four months, Prof Agarwal hoped.