Context:

• According to a member of the Economic Advisory Council to the Prime Minister of India, Indians have spent USD 375 billion on gold imports on a net basis in the last 21 years.

The Impact of Gold Imports on India’s GDP Growth

• According to him, India could have achieved its US$ 5 trillion GDP target earlier if it had not resorted to importing gold and the habit of importing gold has led to a loss of one-third of India’s GDP.
• He implied that instead of investing in gold, money could be invested in India’s entrepreneurs.

Gold Imports in India

• India has been one of the largest consumers and importer of gold in the world for a long time. 
• In 2021, India ranked as the second largest gold importing country worldwide based on value, just below Switzerland and accounted for over 14% of global gold imports.
• In fiscal year 2022, India was estimated to import more than 3.4 trillion Indian rupees worth of gold. 
  • This represented an increase of around 35% compared to the previous year. 
• Reason for High Gold Imports: In India gold is viewed not only as a consumption good and a financial asset and it also has a socio cultural dimension since ages.
• Problem: Gold imports act as a huge burden on the country’s current account balance and a large part of it lies idle in the economy. 

Recommendations of Niti Aayog: ‘Transforming India’s Gold Market’ Report The  report included five focus areas:

• Make in India in Gold.
• Financialisation of Gold.
• Tax and Duty Structure.
• Regulatory Infrastructure.
• Skill Development and Technology Upgradation.

News Source: Economic Times