India's ₹8.6 Lakh Crore Gold Puzzle: Why Is Uday Kotak Warning About The Country's Favourite Metal?

Mumbai: Veteran banker Uday Kotakhas warned that India’s gross gold import bill could climb to approximately Rs 8.4-8.6 lakh crore in FY27, intensifying pressure on the country’s external finances as crude oil prices rise and the rupee weakens.

Speaking at the Conference on Financing India’s Journey Towards Viksit Bharat, Kotak said India must find a practical solution to its gold imports. The event was attended by Finance Minister Nirmala Sitharaman and finance ministers from states and Union Territories.

Kotak

noted that India recorded a current account deficit of nearly Rs 2.4 lakh crore in FY26, while gross gold imports stood at around Rs 6.9 lakh crore. Excluding gold purchases, the country would have registered a current account surplus, he said.

Household wealth remains unproductive

Kotak argued that although Indian households possess considerable wealth in gold, much of it remains outside productive economic activity.

For FY27, he estimated that the current account deficit could widen to approximately Rs 5.75 lakh crore if crude oil averaged around Rs 8,600 a barrel. Simultaneously, gold imports could surge towards Rs 8.6 lakh crore.

“Indians and their gold — that is a puzzle we have to find a way to solve,” Kotak said. He suggested forming a committee to examine solutions while respecting household requirements and addressing India’s capital and current account challenges.

Fiscal discipline, productive markets needed

Kotak also called for sharper fiscal consolidation, saying India’s combined Centre-state fiscal deficit remained above 7 percent and required tighter management.

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He cautioned against excessive financialisation, stressing that capital markets must primarily support capital formation rather than become dominated by trading volumes and short-term price movements.

Turning crisis into opportunity

Kotak urged India to use global economic uncertainty to accelerate reforms and investment. The country, he said, must produce more goods and services demanded worldwide while reducing dependence on critical imports.

He also advocated balanced financial regulation, accountability for individual wrongdoing and stronger Centre-state coordination to help India withstand mounting global trade, geopolitical and financial pressures.