During a rally in Hyderabad on May 10, 2026, Prime Minister Narendra Modi made some appeals to the citizens of the country – appeals that no Prime Minister had ever made before. He said that patriotism not only means sacrificing one’s life but also living responsibly in difficult times. Prime Minister Modi further appealed to the public to avoid buying gold for a year. Let us know the reasons behind this appeal, its importance and how much India spends on gold import.
Appeal not to buy gold for one year
There is a lot of discussion on Prime Minister Modi’s appeal of not buying gold for a year. This appeal has been made in the context of the ongoing conflict with Iran, rising crude oil prices and weakening rupee. The question arises that if citizens stop buying gold for a year, what will be the benefit to India’s foreign exchange rate?
What do the statistics show?
According to *Trading Economics* data, India’s foreign exchange reserves currently stand at about $690.69 billion. India’s foreign exchange reserves reached a peak of $728 billion in February but fell to about $691 billion in April as global uncertainties increased, Reserve Bank of India (RBI) data showed. Furthermore, according to International Monetary Fund (IMF) projections, India’s current account deficit (CAD) is expected to increase to $84.5 billion in 2026. This figure is about 2 percent of the country’s GDP. A growing current account deficit means that the amount of dollars going out of the country is greater than the amount of dollars coming into the country.
India ranks second in gold import
India is the second largest consumer of gold in the world. The country consumes about 700 to 800 tonnes of gold annually, while its domestic gold production is only 1 to 2 tonnes. As a result, India depends on imports to meet about 90 percent of its gold needs. Payment for these gold imports is made in US dollars. According to data for FY 2025-26, India’s gold imports have reached $72 billion – a growth of 24 per cent compared to $58 billion recorded in FY 2025.
What would happen if people stopped buying gold for a year?
In contrast, if Indians were to reduce their gold purchases for a year – resulting in a 30 to 40 percent reduction in gold imports – $20 to $25 billion could be saved. If gold imports were reduced by 50 percent, savings could reach $36 billion. This figure is equal to almost half of the current account deficit. Simply put, abstaining from buying gold for a year could directly reduce dollar inflows into India by billions of dollars.