NEW DELHI(BullionStreet): India is likely to announce more measures in the up coming budget to curb the climbing gold imports, analysts said.

The Finance ministry under P. Chidambaram may take more measures considering country's swelling current account deficit and the dangers posed to the stability of the banking system., they added.

India will present its annual budget on 28 February. Finance minister P. Chidambaram is seeking to curb the spending deficit, partly by increasing taxes.

New measures might include more paper products that include various gold-backed financial products that would not require gold from abroad.

The finance ministry had earlier raised the import duty on gold from 4% to 6% to contain current account deficit which has been widening mainly on account of a surge in import of gold.

Gold rallied for a 12th year in 2012 as investors and central banks boosted purchases, forcing India to triple the import duty. India’s current account deficit hit near six percent and in some months gold imports accounted for half the gap.

Country's central bank recently suggested fiscal and non fiscal steps to check import of the yellow metal. However,some analysts said it is not yet clear whether the measures will actually curb the volume of gold imports as higher tax could simply divert more of the gold trade on to the black market.

After petroleum products, gold accounts for the highest outflow of foreign exchange in India.

India is the world’s largest gold importer and accounts for more than a fifth of global demand. Any drop in India’s gold consumption could be one of the reasons for a possible lackluster performance by the gold.