Modi's Gold Buying Plea Sparks Economic and Political Debate

Prime Minister Narendra Modi has called on Indians to exercise restraint in gold buying ahead of the festival season, citing economic concerns. The appeal reflects a willingness to deliver an uncomfortable message, but its political cost will depend on consumer response and the impact on the domestic jewellery trade.

The government's concern is the rising bullion import bill amid wars and global uncertainty. India's gold imports rose 24% to $71.98 billion in 2025-26, despite a decline in volumes imported. This surge in demand for foreign exchange can widen the trade deficit and add pressure on the rupee.

However, framing PM Modi's appeal as solely a response to global gold prices offers incomplete context. The government has limited progress in reducing dependence on imported crude oil, and discretionary imports have become an accessible target. Gold is an obvious candidate for restraint, but reducing imports requires more than a Prime Ministerial plea.

Indian households and religious institutions hold an estimated 20,000-25,000 tonnes of physical gold outside formal financial channels. Efforts to mobilise this wealth through the Gold Monetisation Scheme or Sovereign Gold Bonds have met with limited success. The difficulty is not simply that policy has failed to turn physical gold into a financial asset, but also that financial products cannot fully replace the cultural and practical uses of jewellery.