For India’s policymakers, stabilising an extremely vulnerable rupee means targeting the country's deepest economic romance. Following a rare appeal from Prime Minister Narendra Modi urging citizens to voluntarily halt their gold purchases for a year, the government codified the request by hiking import duties from 6 per cent to 15 per cent.
The two-step intervention reflects a calculated gamble to shield foreign exchange reserves and insulate the currency from external energy shocks, even if it means putting a steep premium on the nation's darling safe haven.
The obsession runs deep and in trillions of dollars. Over generations, Indians’ relentless consumption of the yellow metal has accumulated into a vast stockpile dispersed across the country. India is the world’s second-biggest consumer of gold, surpassed only by China, importing roughly 600 to 800 tonnes of the precious metal every year, as per a Bloomberg report.
ALSO READ | India rolls out new gold math with import duty hike. Who will foot the bill?
Morgan Stanley estimates Indian households hold around 34,600 tonnes of the metal — rings, bangles, necklaces, bars — tucked into lockers, temple vaults and ancestral trunks from Mumbai to Kolkata. At current international prices, that would equate to a staggering $5.2 trillion.
