RBI buys record gold, what is PM Modi up to?

India's gold buying spree started soon after the Modi government took over the reins in 2014. Leading a nationalist government, PM Modi has been at the forefront of the drive to bring back India's past glory and taking it to a new level.

New Delhi, Dec 26: The recent developments in the global economic affairs have been quite positive for India. Not only several countries have started trading in Indian rupee (INR) for their trade settlements but INR has also become a trusted currency world over. The gold standard that had disappeared in the 1970s, looks like making a mega comeback now, for obvious reasons.

India has been purchasing gold quite consistently for the last almost one decade. The quantum of purchase has just gone up amidst global economic uncertainties and now India holds more than 781 tonnes of gold. In terms of gold reserves, India now ranks ninth largest gold-holding country in the world. That's not a small achievement when we look back at the situation in the 1990s when India had to mortgage most of its gold reserves with the Bank of London to pull back the economy from the brink.

Countries raking up gold to meet contingency

Is India the only country that is raking up gold? No. In fact, several other nations have gone on a buying spree recently. Yes, central banks globally bought more than 463 tonnes of gold in 2021 and nearly 704 tonnes this year which is the most annual increase since 1967. The hunger for gold has gone up for various reasons, especially from Russia and China.

According to some analysts, Russia and China are hoarding gold for the obvious reason that they are not so great in terms with the USA. In fact, China according to them is importing and holding more gold than it reports to reduce its exposure to the US dollars.

Making India great again

Traditionally, India has been called 'golden bird' for its richness and wealth. Even the British considered it a 'Jewel in their Crown' for its resources. It's another story that the British loot turned India into one of the poorest countries, to the extent that even today, 75 years after they left the country, India is facing economic difficulties. However, now India is not only among the top five economies but in the coming days it would become the third largest economy in the world.

Interestingly, India's gold buying spree started soon after the Narendra Modi government took over the reins in 2014. Leading a nationalist government, Prime Minister Modi has been at the forefront of the drive to bring back India's past glory and take it to a new level. Since 2017, the Reserve Bank of India (RBI) has purchased over 200 tonnes of gold, which is quite astounding in itself.

Needless to say, the record gold buying data reflects officially reported gold purchases. Speculations are also there that there are large unreported increases in India's gold-holdings, and this is done so that the gold-exporting countries don't increase the gold prices. Moreover, India with its gold reserves is also trying to strengthen its national currency and economic stature.