PM Modi's Second Appeal: Avoid Buying Non-Essential Gold to Save Dollars

Indian Prime Minister Narendra Modi has made an appeal to citizens not to buy gold for non-essential purposes. This is his second such appeal in four months, with the first one being on May 10th. He has emphasized that buying gold affects India's import bill and reduces its foreign exchange reserves.

The majority of India's gold imports come from abroad, which puts pressure on the country's dollar reserves. The Reserve Bank of India (RBI) uses these dollars to pay for essential goods such as crude oil, electronics, and machinery. A weaker rupee against the dollar increases the import bill, making it harder for India to pay its bills.

Ajay Kedia, founder of investment advisory firm Kedia Advisory, believes that reducing gold imports can strengthen the rupee and improve India's current account balance. He estimates that gold is responsible for 9% of India's total expenditure on goods purchased from abroad.