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Why in News:
- The Centre has doubled the effective tax on gold and silver imports to 18.4% to manage the Current Account Deficit (CAD) amid the West Asia crisis.
Key Facts: Current Account Deficit (CAD)
- Definition: CAD is a measurement of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.
- Components: It represents the sum of the balance of trade (goods and services), net factor income (such as interest and dividends), and net transfer payments (such as remittances).
- Impact of Gold Imports: Gold is the second-largest import item for India after crude oil; high gold imports widen the CAD, putting pressure on the Indian Rupee and foreign exchange reserves.
