{"id":347628,"date":"2025-10-08T17:56:30","date_gmt":"2025-10-08T12:26:30","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=347628"},"modified":"2025-10-12T10:01:32","modified_gmt":"2025-10-12T04:31:32","slug":"a-path-to-progress-that-is-paved-with-gold","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-path-to-progress-that-is-paved-with-gold\/","title":{"rendered":"A path to progress that is paved with gold"},"content":{"rendered":"<p><strong>UPSC Syllabus Topic:<\/strong> <strong>GS Paper 3 -Indian economy<\/strong>.<\/p>\n<h2><strong>Introduction<\/strong><\/h2>\n<p>India needs reliable, long-term capital that comes from inside the economy, not from volatile foreign flows. Global investment is shrinking and the cost of overseas borrowing is rising. <strong>Relying on external money adds risk. A practical answer is to mobilise household gold.<\/strong> Indian families trust gold and hold it at very large scale. The task is to shift idle gold into formal finance without coercion. This needs strong infrastructure, clear rules, and digital tracking. If done well, it can ease imports, strengthen the current account, and finance growth on India\u2019s own terms. <strong>A path to progress that is paved with gold.<\/strong><\/p>\n<p><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-347865\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?resize=535%2C355&#038;ssl=1\" alt=\"A path to progress that is paved with gold\" width=\"535\" height=\"355\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?resize=300%2C199&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?resize=1024%2C680&amp;ssl=1 1024w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?resize=768%2C510&amp;ssl=1 768w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?w=1280&amp;ssl=1 1280w\" sizes=\"auto, (max-width: 535px) 100vw, 535px\" \/><\/p>\n<h2><strong>Status of Gold in India<\/strong><\/h2>\n<ol>\n<li><strong> Household stock:<\/strong><\/li>\n<\/ol>\n<ul>\n<li>Indian families collectively hold <strong>about 25,000 tonnes of gold<\/strong>, valued near <strong>$2.4 trillion<\/strong>.<\/li>\n<li>This is <strong>over 55% of India\u2019s FY26 GDP<\/strong>, larger than all bank credit.<\/li>\n<li>It is also <strong>nearly six times Pakistan\u2019s GDP<\/strong> and <strong>greater than Italy\u2019s economy<\/strong>.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong> Import dependence: <\/strong><\/li>\n<\/ol>\n<ul>\n<li>Despite this stock, India meets <strong>roughly 87%<\/strong> of demand through imports. Gold forms <strong>about 8%<\/strong> of the total import bill.<\/li>\n<\/ul>\n<h2><strong>Significance of Gold in Indian Economy<\/strong><\/h2>\n<ol>\n<li><strong>Deep cultural trust.<\/strong> Gold holds <strong>civilisational value<\/strong> and social acceptance.<\/li>\n<li><strong> Household savings.<\/strong> Families buy gold on <strong>auspicious occasions and ceremonies<\/strong>. It is <strong>passed across generations<\/strong> and viewed as <strong>secure wealth<\/strong> that can be used in need.<\/li>\n<li><strong>Monetary stability.<\/strong> Central banks <strong>hold gold<\/strong> as a buffer in uncertain times.<\/li>\n<li>I<strong>ndustrial uses : <\/strong>Gold also supports <strong>industrial uses<\/strong> in areas such as electronics, dentistry, and aerospace, which add to its <strong>intrinsic value<\/strong>.<\/li>\n<li><strong> Store of value.<\/strong> Gold helps <strong>preserve purchasing power<\/strong> and acts as a <strong>hedge against inflation<\/strong>. Its price often moves <strong>differently from stocks and bonds<\/strong>, improving <strong>risk balance<\/strong> in portfolios.<\/li>\n<\/ol>\n<h2><strong>Major concern related to gold for Indian economy<\/strong><\/h2>\n<ol>\n<li><strong>Idle stock of gold: <\/strong>Households hold a very large stock of gold, but most of it stays idle. This pushes up <strong>imports<\/strong> despite abundant domestic holdings and adds pressure on the <strong>current account<\/strong>.<\/li>\n<li><strong>Import dependence : <\/strong>India still meets <strong>about 87% of demand<\/strong> through imports, and gold has formed a sizable share of the <strong>import bill<\/strong>. This weakens external balances and ties growth financing to foreign conditions rather than stable, rupee savings.<\/li>\n<li><strong>Fragmented policy and regulatory complexity: <\/strong>There is <strong>no cohesive gold policy<\/strong>. Rules are spread across several authorities, creating overlapping circulars and notifications.<\/li>\n<\/ol>\n<h2><strong>Key Regulatory Bodies Overseeing Gold Imports<\/strong><\/h2>\n<ul>\n<li><strong>Directorate General of Foreign Trade (DGFT)<\/strong>: Oversees policy implementation and license approvals.<\/li>\n<li><strong>Reserve Bank of India (RBI)<\/strong>: Monitors cross-border transactions and liquidity.<\/li>\n<li><strong>Central Board of Indirect Taxes and Customs (CBIC)<\/strong>: Manages customs duties and compliance.<\/li>\n<\/ul>\n<h2><strong>Government initiative to bring gold in main economy<\/strong><\/h2>\n<ol>\n<li><strong>Gold Monetisation Scheme (GMS):<\/strong> People and institutions deposit jewellery (without stones), coins, or bars with banks and <strong>earn interest<\/strong>.<br \/>\n2. <strong>Sovereign Gold Bonds (SGB):<\/strong> RBI issues bonds <strong>denominated in grams of gold<\/strong>, offering a non-physical, savings-friendly option.<br \/>\n3. <strong>Indian Gold Coin (IGC):<\/strong> <strong>Government-minted, hallmarked coins<\/strong> made from <strong>domestically recycled gold via GMS<\/strong>, closing the loop through a circular economy.<\/li>\n<li>A <strong>NITI Aayog committee on \u201cTransforming India\u2019s Gold Market\u201d<\/strong> brought ministries, RBI, industry, and academia together to assess challenges and opportunities, including exports, jobs, outreach for monetisation, and domestic supply.<\/li>\n<li>The <strong>2018\u201319 Budget<\/strong> announced work toward a <strong>comprehensive gold policy<\/strong> to develop gold as a financial asset class.<\/li>\n<li><strong>Regulatory steps<\/strong> include <strong>mandatory six-digit HUID hallmarking<\/strong> and <strong>import-duty revisions<\/strong> to curb smuggling.<\/li>\n<li>The <strong>RBI has reformed gold loans<\/strong>, with new rules <strong>effective from October 2025. It\u2019s <\/strong>aimed is to make gold loans more borrower-friendly and expanding collateral eligibility, including tighter Loan-to-Value (LTV) caps for certain loan amounts.<\/li>\n<\/ol>\n<h2><strong>Way forward<\/strong><\/h2>\n<ol>\n<li><strong>Build infrastructure: Need to <\/strong>Scale <strong>hallmarking and purity-testing centres<\/strong> for trusted, uniform purity checks across India. Build a <strong>formal network of collection and purity-testing centres<\/strong> so households can deposit jewellery, coins, and bars confidently. <strong>BIS-registered centres have nearly doubled in four years<\/strong>, but gaps remain<\/li>\n<li><strong>Strengthen logistics:<\/strong> Let <strong>banks handle money flows<\/strong> end-to-end. Use <strong>experienced collection and purity-testing centres<\/strong> to manage <strong>secure, transparent movement of gold<\/strong> from deposit to refinery and back into the system.<\/li>\n<li><strong>Digitalisation<\/strong>:<\/li>\n<\/ol>\n<ul>\n<li>Provide a <strong>mobile \u201cmetal balance\u201d<\/strong> so households track deposits like bank accounts.<\/li>\n<li>All steps must be <strong>digital<\/strong>\u2014account opening, purity test results, deposit certificate, interest credit, and redemption\u2014so the status is easy to track <strong>in real time<\/strong>.<\/li>\n<li><strong>Returns should go directly to the depositor\u2019s bank account<\/strong>, with <strong>no hidden costs<\/strong>. Every entry should be <strong>time-stamped and auditable<\/strong>, making the process simple, transparent, and trustworthy.<\/li>\n<\/ul>\n<p>4.<strong>Trust building: There is a need to e<\/strong>ase <strong>GST and customs scrutiny on deposits<\/strong>, keep the process <strong>simple and \u201cno-questions-asked,\u201d<\/strong> and maintain transparent terms.<\/p>\n<h2><strong>Conclusion<\/strong><\/h2>\n<p>India has repeatedly turned crises into capability\u2014food security in the 1960s, digital leadership in the 1990s, and vaccine self-reliance during COVID-19. The next frontier is <strong>financial self-reliance<\/strong>. Mobilising household gold through trustworthy systems, clear rules, and digital tracking can fund growth from within. <strong>If structured well, the cost of funds at 4.5%\u20136.5% is lower than international borrowing.<\/strong> Even modest mobilisation would cut import pressure, support the current account, and create a large domestic capital pool for <strong>infrastructure, manufacturing, and innovation<\/strong>. Done right, <strong>Bharat can fund Bharat<\/strong>\u2014converting idle metal into productive capital and financing growth on India\u2019s own terms.<\/p>\n<p><strong>Question for practice:<\/strong><\/p>\n<p>Examine how gold monetisation can fund India\u2019s growth from within.<\/p>\n<p><strong>Source<\/strong>: The Hindu<\/p>\n","protected":false},"excerpt":{"rendered":"<p>UPSC Syllabus Topic: GS Paper 3 -Indian economy. Introduction India needs reliable, long-term capital that comes from inside the economy, not from volatile foreign flows. Global investment is shrinking and the cost of overseas borrowing is rising. Relying on external money adds risk. A practical answer is to mobilise household gold. Indian families trust gold&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/a-path-to-progress-that-is-paved-with-gold\/\">Continue reading <span class=\"screen-reader-text\">A path to progress that is paved with gold<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":347865,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[216,8184,10498],"class_list":["post-347628","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-gs-paper-3","tag-indian-economy","tag-the-hindu","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/A-path-to-progress-that-is-paved-with-gold.png?fit=1280%2C850&ssl=1","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/347628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=347628"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/347628\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/347865"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=347628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=347628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=347628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}