Prime Minister Narendra Modi has appealed to Indians to refrain from purchasing gold for a period of one year. He argues that patriotism is not limited merely to making sacrifices on the battlefield, but is also intrinsically linked to acting responsibly during challenging economic times. Speaking at a rally in Hyderabad on May 10, PM Modi linked this appeal to rising global tensions, surging crude oil prices, and a weakening rupee. This statement has sparked a debate, as no Indian Prime Minister before him had ever made such a direct public appeal regarding personal gold purchases.
Why Does the Prime Minister Want Indians to Steer Clear of Gold?
India is the world's second-largest consumer of gold and imports approximately 90 percent of its requirements from abroad. The country consumes roughly 700–800 tonnes of gold annually, whereas domestic production is limited to a mere 1–2 tonnes. Since payments for gold imports are settled in US dollars, large-scale purchases place additional strain on India's foreign exchange reserves. According to Trading Economics, India's foreign exchange reserves currently stand at approximately US$ 690.69 billion. Data from the Reserve Bank of India reveals that amidst global uncertainty, these reserves had peaked at US$ 728 billion in February, but have since witnessed a rapid decline. Meanwhile, the International Monetary Fund (IMF) projects that India's current account deficit could widen to US$ 84.5 billion in 2026—amounting to approximately 2 percent of its Gross Domestic Product (GDP).
How Reducing Gold Imports Can Help
In the fiscal year 2025–26, India's gold imports reached approximately US$ 72 billion—a 24 percent increase compared to the US$ 58 billion recorded in the previous fiscal year.
Economists believe that if Indians were to reduce their gold purchases for just one year, the outflow of dollars from the country could be significantly curtailed.A 30–40 percent reduction in gold imports could result in foreign exchange savings of US$ 20 billion to US$ 25 billion for India. If imports were to be halved, these savings could rise to approximately US$ 36 billion—amounting to roughly half of the projected current account deficit. Analysts believe that such savings would help stabilize the rupee, alleviate pressure on foreign exchange reserves, and strengthen India's position amidst a period of global economic uncertainty.
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