Gold Rush in India: A Threat to Economic Stability?

India's gold imports have reached record levels, raising major economic concerns. In November, imports surged to USD 14.86 billion, surpassing crude oil as the leading import. Driven by high festival demand and tariff loopholes, this trend threatens India's trade balance and calls for urgent government intervention.

A concerning rise in India's gold imports has emerged as a potential threat to the nation's trade balance and economic stability, as highlighted by the Global Trade Research Initiative (GTRI) on Tuesday. The government's attention is urgently needed to tackle this issue.

According to data from the commerce ministry, November witnessed gold imports surging to an unprecedented USD 14.86 billion, marking a four-fold increase from the previous year. This spike is attributed to festival and wedding season demands, coupled with various industry dynamics.

The GTRI underscores the economic impact of this trend, noting a distortion in trade balance, a weakened rupee, and an expanded current account deficit. Gold now represents 21.2% of India's total merchandise imports, overtaking crude petroleum. The increasing trade deficit and depreciating rupee signal the need for immediate action to protect economic resilience.

(With inputs from agencies.)