Gold and the Rupee

On 10 May, Prime Minister Modi urged Indians to postpone gold purchases to conserve foreign exchange. It was a reasonable ask. The Hormuz crisis has pushed oil prices higher, the rupee has touched record lows near INR 96 to the dollar, and forex reserves have drawn down sharply.

But the data reveals a more uncomfortable truth. India bought roughly the same volume of gold in FY26 as it did in FY20. The import bill went from $28 billion to $72 billion anyway. Indians are not buying more gold. They are paying far more for the same gold, as prices tripled and a weakening rupee turned an already expensive habit into an even larger dollar drain.

The villain is not Indian consumer behaviour. It is a global gold rally that no domestic appeal can influence. Mr Modi's advisory addresses the one variable within India's control: volume. But volume was never really the problem. At today's prices, buying less saves billions in dollar outflow. That is worth something. But it is damage control, not a cure.

IMA India’s Decoding India is a data-led series that explores the metrics shaping India’s economic and business landscape, presented through comparative visuals across Indian states or peer economies. The aim is simple: to make India’s progress easier to understand at a glance and to surface insights that matter for decision-makers.