New Delhi, September 9, 2026 (Yes Punjab News)
Prime Minister Narendra Modi’s appeal to Indians to avoid unnecessary gold purchases ahead of the festival season has opened a debate over India’s dependence on imported bullion, household savings habits and the political risks of challenging a deeply rooted tradition.
Gold occupies a unique place in Indian households, serving not only as jewellery but also as savings, an intergenerational asset and a form of financial security. Any sustained decline in purchases could affect jewellery sales and merchant communities, several of which have traditionally been part of the BJP’s support base.
The political implications are significant with Uttar Pradesh, Uttarakhand, Himachal Pradesh and Punjab scheduled to go to the polls next year. Whether the appeal carries an electoral cost will depend largely on how consumers and the jewellery trade respond.
The immediate economic concern is the rising dollar cost of gold imports. According to data reported by The Economic Times, India’s gold imports increased more than 24 per cent to a record $71.98 billion in 2025-26, even though import volumes fell nearly 4.8 per cent to about 721 tonnes.
In other words, India imported less physical gold but paid considerably more for it as international prices rose. Higher bullion imports increase demand for foreign exchange and a surge in festive purchases can contribute to a wider trade deficit and, depending on other external flows, add pressure on the rupee.
The issue, however, extends beyond gold prices. India continues to face difficulties in reducing its dependence on imported crude oil. With cutting essential energy imports carrying potentially wider economic consequences, discretionary imports such as gold offer a more accessible area for restraint.
Yet gold cannot simply be treated as discretionary consumption. For millions of families, jewellery represents savings, social security, gifts and family inheritance. This makes a voluntary reduction in demand considerably more complicated.
India’s households and religious institutions are estimated to hold between 20,000 and 25,000 tonnes of physical gold. Mobilising even part of these holdings into the formal financial system could reduce dependence on imports, but previous initiatives have struggled.
The Gold Monetisation Scheme attracted limited household participation, partly because families have been reluctant to surrender and melt ancestral jewellery for interest payments. Sovereign Gold Bonds provided investors with exposure to gold prices without physical ownership, but they could not fully replace jewellery purchased for wearing, gifting or inheritance.
That distinction is central to the policy challenge. A financial investment linked to gold prices cannot completely serve the cultural and practical purposes of physical jewellery.
Modi has previously pursued measures that disrupted established interests, including among sections of his own support base. As Gujarat Chief Minister, he implemented the Jyotigram Yojana, separating agricultural power feeders from those serving other rural consumers despite resistance from sections of the farming community.
As Prime Minister, his government introduced the Goods and Services Tax to create a unified national market, imposing significant adjustment and compliance requirements on smaller businesses and traders. The Insolvency and Bankruptcy Code likewise altered the position of business promoters by giving creditors a framework to resolve corporate defaults, although its implementation has also revealed areas requiring reform.
Those measures changed institutions, rules and incentives. The gold appeal is different: it depends on consumers voluntarily changing their behaviour.
Demonetisation in 2016, ahead of the 2017 Uttar Pradesh election, is another example of a disruptive decision taken before a major political contest. But that precedent does not establish that political risk necessarily translates into economic gains.
The outcome of the gold appeal will ultimately depend on whether households actually defer purchases and whether such postponement produces a lasting reduction in imports. Deferred purchases could return later, limiting the long-term impact.
The intervention nevertheless puts the foreign-exchange cost of India’s gold demand firmly into the public debate. Its success will depend not simply on the strength of the Prime Minister’s appeal, but on whether consumers change their purchasing behaviour, credible alternatives to gold savings become available and more of the country’s existing gold holdings can be brought into productive circulation.
Political consequences, if any, will be a separate test.
Rakesh Khar is a seasoned editor who writes on politics, business, technology and society. Views expressed are personal.
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