Uday Kotak: ‘Indians and their gold is a puzzle we must solve’
"Indians and their gold - that is a puzzle we have to find a way to solve," he said. Kotak suggested that a committee could be considered to work out a solution that takes into account people's requirements while also addressing the country's capital and current account challenges.
India's gold imports have captured attention due to the US-Iran war, as they place strain on the nation's import bill at a time when oil prices are on the rise and the rupee is weakening. Uday Kotak, founder of Kotak Mahindra Bank and a seasoned banker, expressed concern over India's high gold imports, forecasting that the country's gross gold import bill could surge to $88-90 billion in the fiscal year 2027 (FY27).
He proposed establishing a committee to investigate the matter. Speaking at the Conference on Financing India's Journey Towards Viksit Bharat, the event hosted Finance Minister Nirmala Sitharaman and state and Union Territory finance ministers, Kotak highlighted that while Indian households may possess significant gold wealth, it has not been put to productive use in the economy.
The current account deficit for India in FY26 was 25 billion dollars, but Kotak pointed out that the gross gold imports amounted to $72 billion, which resulted in an overall current account surplus for the nation. He projected that India's current account deficit could potentially reach $60 billion if oil prices average out around $90 during the ongoing financial year, with gold imports expected to climb to $88-90 billion.
Kotak advocated for greater fiscal consolidation, emphasizing that India's consolidated fiscal deficit remains above 7 percent and urging for tighter fiscal policies, given the fiscal pressures faced by both the central government and the states.
Discussing India's economic growth financing, Kotak noted that the country has transitioned from a traditional saver-to-borrower model to an investor-to-issuer framework supported by capital markets. He cautioned against overemphasizing financialization, urging that capital markets should primarily serve capital formation rather than solely focus on trading activity, volumes, and market movements.
Kotak cautioned that when capital formation loses its priority and financial markets become preoccupied with trading, volumes, and market movements, the true purpose of financial markets may be jeopardized. He suggested that the current global uncertainty should be viewed by India as an opportunity to expedite reforms and investments.
Kotak highlighted the importance of expanding India's production of goods and services with global demand while reducing reliance on other countries for essential goods and services to enhance competitiveness. He advocated for a balanced approach between regulation and development in the financial sector, emphasizing that regulators must ensure system stability without hindering growth.
Kotak also called for swift action against individuals responsible for misconduct, while protecting financial institutions from the fallout. He emphasized the need for India to maintain vigilance against complacency and strengthen coordination between the Center and the states to effectively tackle global challenges.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
