Gold Unproductive; We Spend Valuable Forex Importing It: Economist Arun Kumar, Amid PM Modi's Insta Appeal
"PM's message should be seen as a call to avoid unnecessary gold bar, bullion purchase," Gems and Jewellery Council Chairman Rajesh Rokde tells Saurabh Shukla.
Published : September 1, 2026 at 6:37 PM IST
New Delhi: In an Instagram video posted on Tuesday, Prime Minister Narendra Modi repeated an appeal — first made on May 10, days before he had embarked on a five-nation tour — asking Indians to shun leisure trips abroad, to avoid getting married overseas and to refrain from buying gold unless necessary. In his latest appeal, this time from the Kyrgyz capital of Bishkek, he also called for greater use of Indian products and services to boost domestic demand. This has reignited a debate over whether Indians will actually cut down on gold purchases, or not.
Gold is not just an investment in India. It is closely linked to weddings, festivals, birthdays and many other family traditions. Here, jewellery is also seen as a form of savings, as well as financial security.
Speaking on the PM’s appeal, Chairman of the All India Gems and Jewellery Domestic Council (AIGJDC) Rajesh Rokde said he does not expect Indians to stop buying gold jewellery.
He said the PM’s message should be seen mainly as a call to avoid unnecessary purchase of gold bars and bullion investment. Experts believe that India imports around 80 per cent of its gold, which requires dollar payments. A fall in unnecessary gold purchase could therefore help reduce the pressure on the country’s foreign exchange reserves.
‘Jewellery Purchase Won't Stop’
However, Rokde said gold jewellery purchases are different. Families buy jewellery for weddings, festivals and other auspicious occasions, and this tradition is unlikely to disappear. In our culture we purchase gold throughout the year and here people buy gold in one form of another, he added. He also said that jewellers do not encourage customers to buy gold bars or bullion as investment.
On PM’s remark of GDP growth of 7.8 per cent, he highlighted the contribution of the jewellery sector to the economy. He said the industry contributes nearly 7 per cent to the GDP, and provide employment to a large number of people across the country.
So why did the PM make this appeal, and why is there a need to reduce gold purchases?
According to data provided by AIGJDC, India’s gold import has declined significantly, compared to last year, largely due to the sharp increase in gold prices. However, a significant purchase has been visible in the short term. India imported approximately 45 tonnes of gold in April 2026, while imports fell to 30 tonnes in May. Subsequently, imports stood at 20 tonnes in June, before rising to 32 tonnes in July and 45 tonnes in August. This recent increase suggest a gradual revival in the gold import demand, despite elevated prices.
‘Gold A Dead Asset’
Noted economist and retired professor of Jawaharlal Nehru University (JNU), Arun Kumar, told ETV Bharat that although gold is considered a safe haven investment and can be useful as a hedge against inflation and price rise, but purchased gold is also often regarded as a ‘dead’ or ‘unproductive asset’, because it remains idle for most of the period in which it is held as an investment.
He also argued that if the money invested in gold were instead used to purchase machinery, invest in a company or kept in a bank, it could be put to more productive use, and would contribute to economic activity and employment generation. In contrast, gold is not produced domestically in sufficient quantities, and India has to spent valuable foreign exchange including dollars to import it.
If people follow the PM’s advise, reduce their consumption of physical gold and redirect their savings towards more productive investments, it could benefit the economy in several ways, including supporting investment, generating employment and reducing the outflow of foreign exchange.
Gold bought from overseas has to be paid for largely in US dollars. When demand for imported gold rises, importers require more dollars to make those payments. That creates additional demand for foreign exchange and can put pressure on the country’s external finances. Particularly when the global markets are already unsettled.
For an individual buyer, purchasing a gold chain, ring or coin may be a household decision. But across millions of consumers, those purchases add up to billions of dollar leaving the country.
Earning From Import Duty & Illegal Imports
After the PM's May appeal, the government imposed import duty on gold and silver. It imposed 10 per cent basic customs duty and 5 per cent Agriculture Infrastructure and Development cess on gold and silver imports, taking the effective import tax to 15 per cent. Since May 13 to August 2, the government has collected Rs 10,040 crore in customs duty from gold imports, according to data shared by the Finance Ministry in Parliament. It also shared details of gold seized and illegal imports, following the increase in duties. Between May 13 and June 30, 287 cases were recorded, approximately 160 kg of gold seized, and 116 people arrested.
With PM Modi's renewed appeal, will we see another hike in import duty on gold and silver? Only time will tell.
Also Read:
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- Gold Declines For 3rd Day, Prices Tumble Rs 3,300 As US Dollar Gains Strength
- Gold, Silver Trade Higher As Easing Crude And Bond Yields Support Precious Metals
- Gold Touches Five-month High At Rs 1.64 Lakh Per 10g In Delhi Amid Firm Global Cues
