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How Indians can have their gold and curb imports too

There is a need to devise innovative, unconventional mechanisms that encourage people to refrain from buying physical gold.

Prime Minister Narendra Modi’s appeal to citizens to cut back on gold purchases marks a rare instance in which a PM has personally asked the public to curb such spending. 

 His emotional appeal also included a request to curtail petroleum consumption and refrain from unnecessary foreign travel. It came as the conflict between the US, Israel, and Iran disrupted crude oil supplies and led to a continuous surge in prices. The country’s trade imbalance has become even more acute, and the Indian rupee has depreciated rapidly, currently hovering around Rs 95-96 per US dollar. Several experts have even expressed apprehension that it could breach the 100-rupee-per-dollar mark.

Indian governments have historically imposed various restrictions on gold imports to conserve foreign exchange—ranging from periodic hikes in import duties to quantitative controls—but this appeal was a departure from the norm.

The Indian public’s fascination with purchasing gold is nothing new. For thousands of years, people across the country have made substantial gold purchases, primarily in the form of jewellery. This long association between gold and jewellery led some to read the Prime Minister’s appeal as a call to specifically curb jewellery purchases.

But the question is whether jewellery is still driving India’s demand for gold, and whether new investment options could offer an alternative.

Also Read: Modi’s call to cut fuel use wasn’t just about oil—it was about saving the rupee

New driver of gold demand

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