Under an ordinance issued to-day [July 11] the Government of India are taking power to acquire all silver coin and bullion imported on private account other than current silver coin of the Government of India. The silver so acquired will be paid for in London at a rate 5 per cent, below the London quotation on the date of acquisition by the Government of India. The reason for adopting this particular basis of payment is that 95 per cent of the London price represents approximately the American price of silver plus the cost of freight and insurance from America to India and it is necessarily lower than the London quotation which includes an additional 5 per cent, on account of the greater cost and risk involved in shipping silver from America to London. The silver will of course remain private property and subject to any risks incidental to transit until it is made over to the Government. This follows from the fact that as just stated the rate fixed for payment covers freight and insurance charges to India. The import duty will not be levied on silver so acquired by the Government.
A notification has also been issued to-day prohibiting the import of silver into India except in the case of (a) current silver coins of the Government of India, (b) silver coin or bullion imported on Government account and (c) silver coin or bullion imported under license.
These measures which have been decided on in consultation with His Majesty’s Government supplement the section recently taken in regard to the gold, the object being to strengthen the general currency position. As is well known, owing ‘inter alia’ to the prosperity of India at the present time, the strong external demand for many of India’s products and the large disbursements which the Government is making in India the coin requirements have for many months been on an unprecedented scale and heavy additions to the rupee currency have been necessary. The Secretary of State has succeeded in making large purchases of silver, but it is desirable to eliminate where possible competitive buying against him. The silver which he can purchase by payment in London and ship to India forms a portion of the resources on which the Government of India have to rely for payment of councils and any impediment to his purchases must react on the amount of councils which he is able to sell. It is therefore to the interest of trade that competition with his purchases should be as far as possible eliminated.
Source: Thehindu.com
