Officials are going through piles of papers in the Union Finance Ministry and elsewhere to determine the circumstances that compelled the then government on 13 May 2014, when the model electoral code of conduct was in operation, counting of votes of national election was to begin on 16 May, and a new government was barely days away from being sworn in, to extend the 20:80 gold import scheme to private trading houses (PTHs)/star trading houses (STHs). The 20:80 policy, introduced in 2013 to reduce the current account deficit, permitted only banks and PSUs like MMTC, STC, etc. to import gold for domestic use. The scheme was designed to restrict the import of gold, conserve foreign exchange by imposing export obligations, and ensure that the premium from purchase and sale of gold resided in the hands of public agencies. However, from 21.5.2014, the PTHs/ STHswere also allowed to import gold under 20:80 scheme after the then Finance Minister, P Chidambaram, approved a modification in the scheme on 13.5.2014. At the time when the scheme was announced, it was known that there was a shortage of gold for domestic use and a premium between USD 100 to USD 150 per ounce (Approximately Rs 2 lakh per Kg) was being charged from the domestic customers. Allowing private companies like PTHs and STHs to import gold provided these agencies an opportunity of windfall gain, as the benefit of the high premium on gold could now be availed of by these agencies. It has been observed by CAG that gold imported by 13 trading houses during June 2014 to November 2014 was 282.77 MTs which means a windfall gain of about Rs 4,500 cr to these agencies during this period, assuming a premium of Rs 2 lakh per kg and 80% of imported gold supplied to domestic market earning the premium. Even the export obligations were being met through export of plain jewellery, viz., bangles and chains, which were re-melted in offshore locations through front/ shell companies for the purpose of re-import. When the new Government reviewed the scheme, it was noted that since the liberalization in May 2014, recorded gold imports had increased substantially averaging about 140-150 tons a month. The increase in gold imports had benefitted disproportionately the STH/PTHs whose imports had shot up by 320 percent and who then accounted for 60% of all imports compared to 20% before May. This benefit stemmed from a de facto discrimination in their favour because the expanded 20:80 scheme privileged these STHs/PTHs, who being traders and exporters (of anything and not just gold), and best positioned to take advantage of the scheme. Therefore, it was found that the advantage to the STHs/PTHs extended in May 2014 was unfair and this discrimination in their favour needed to be eliminated. Therefore, the new Government decided to end the discrimination and scrapped the 20:80 scheme altogether on 28.11.2014. Officials clarify that at no point, no view on the merit of the scheme or otherwise has ever been indicated. The allegation of justification for the scheme or for allowing PTHs/STHs are completely erroneous. The review of the scheme by the Government was undergoing and a decision to abolish the scheme was taken in November 2014. They further clarify that the impact of abolition of 20:80 scheme on any particular company or all such PTHs/STHs is not a policy issue to be decided by the Government. As has been pointed out by CAG, average monthly import of gold declined to 71.50 MT after abolition of 20:80 scheme (from Dec 14 to Mar 15) from a high of 92.16 MTs during June 14 to Nov 14 when PTHs/STHs were allowed under 20:80 scheme. It was merely 33.60 MT per month under 20:80 during Aug 13 to May 14 before PTH/STHs were allowed in May 2014. Thus, it is clear that abolition of 20:80 scheme eliminated undue advantage to PTHs/STHs and import of gold was reduced.